In This Article:
Walgreens Boots Alliance (WBA) shares declined during Tuesday's trading session following a Department of Justice lawsuit alleging that the pharmacy chain knowingly dispensed millions of illegal drug prescriptions to customers, particularly related to opioids.
Catalysts co-hosts Madison Mills and Seana Smith break down the details, examining how this legal challenge could affect the pharmacy's proposed deal with Sycamore Partners that could bring the company private.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Angel Smith
Now time for some of today's trending tickers. You can scan the QR code below to track the best and the worst performing stocks of this session at Yahoo Finance's trending tickers page. First up, let's take a look at Walgreens. Walgreens shares under pressure here this morning, now off just over 11%. Moves to the downside coming after the Department of Justice sued the company for allegedly dispensing millions of unlawful prescriptions specifically related to opioids. Now this could increase the likelihood of a leverage buyout. It actually could increase some of the risks associated with talks of a leverage buyout here by the PE firm Sycamore partners. So very much putting that into question. That's the real takeaway from Wall Street here this morning. A number of analysts out just talking about the fact that it already pressures the cash flow as well as reports here that it could go private with Sycamore partners. So so just in terms of, I guess, the uncertainty that this also reintroduces. There was a lot of talk or maybe the thing, not so much talk, but maybe the thinking out there in the streets, whether or not we were past the worst of it when it comes to some of these opioid suits, when it comes to some of these issues that has been plaguing not only Walgreens, but some of its peers within the sector. And I think this very much shows that these red flags are not yet behind this sector, and very much something that investors need to be paying attention to.
And it's really interesting given just the pressure that we've seen on Walgreens stock and these several kind of factors that are headwinds for the company here. I took a look at the analyst recommendations because I was interested in that JP Morgan call that you're pointing out, Seana. This idea that maybe this isn't that much of a long-term risk for the company. But having said that, we still have a mixed picture when it comes to these analyst ratings. A little over half the street, 66% of analysts have a hold rating. Only three have buys, and then three have that rare sell rating on the stock. So that paints a pretty mixed picture and one that is indicative of the headwinds facing Walgreens, that also, to your point, kind of lead to these talks of a potential leverage buyout with Sycamore and what that will look like. It's also interesting given the share move to the upside that we saw for Walgreens after that news of that potential buyout broke.
Yeah, and JP Morgan within their note saying, quote, "We believe that the headline risk is a reminder that opioid risks are not fully behind it, making that leverage buyout LBO even more difficult for a buyer there." So again, some of that that sentiment shifting a bit on the street.
Yeah, absolutely.
