Walgreens Stock Stumbles Amid Legal Challenges, Throwing Cold Water on Hopes for a Rebound

After a tough year for Walgreens (WBA) investors in 2024, shares may have appeared poised to start 2025 on strong note after the company’s first-quarter results topped expectations.

However, even before a new lawsuit from the Department of Justice sent shares sharply lower Tuesday, analysts remained uncertain about the stock.

Among the eight analysts covering Walgreens tracked by Visible Alpha, four issued “hold” ratings for the stock, three rated it “sell,” and just one gave it a “buy” rating, with an average price target of $10.81, just below the level Walgreens shares closed at Tuesday after tumbling over 9% to $11.37.

Jefferies and Deutsche Bank analysts kept “hold” ratings and voiced caution earlier this month in the wake of the company’s better-than-expected results. Jefferies analysts said that while the results were encouraging, they “don’t see it as an ‘all clear’ just yet,” adding they “want to see more positive datapoints” before projecting a larger turnaround.

The analysts warned that despite the company’s cost-cutting efforts like closing hundreds of “underperforming” stores, the company’s retail pharmacy business is likely to “remain challenged.”

The new suit from the DOJ adds a layer of regulatory risk to Walgreens’ already-challenged retail environment, as its CEO acknowledged in its earnings call earlier this month that some strategies like locking up products did not work as well as expected.