Walgreens Boots Alliance Inc., (NASDAQ: WBA), has seen its stock value plummet by over 65% in the past year.
Pfizer Inc., (NYSE: PFE), and Eli Lilly & Co., (NYSE: LLY) are putting new pressures on the company.
Both companies have launched strategies which could have a significant impact on Walgreens’ traditional retail operations and pharmacy operations.
This week, Pfizer launched “PfizerForAll,” an eCommerce and telehealth platform designed to streamline the access to healthcare services.
This new initiative is a direct threat against Walgreens’s traditional clinic model.
Pfizer’s platform offers virtual healthcare services and direct-to consumer drug delivery. This could reduce foot traffic in Walgreens clinics.
PfizerForAll also allows patients to receive their Pfizer medication at home, which could reduce Walgreens’ sales in its retail pharmacies.
Eli Lilly could impact Walgreens sales
Walgreens is also not helped by Eli Lilly & Co. (NYSE: LLY).
The company’s eCommerce platform offers a 50% discount to consumers who order directly from it.
The update from Lilly is likely to make many changes to its online platform, which will further reduce WBA’s retail sales.
Walgreens will be impacted by the above developments in terms of its sales and margin profile. Wall Street may have rated the Nasdaq listed company as “hold” for this reason.
Is Walgreens Stock a Value Trap?
Walgreens’ stock still has an attractive dividend yield of 10.58%. There are concerns about its sustainability, given that the multinational continues to struggle to be profitable.
The company had a negative cash flow of $1.1billion in the first nine month of 2024. WBA cut its dividend by almost half in June.
Walgreens’ stock may seem cheap because it is trading at around 6 times its trailing earnings. The above challenges are why investors might be better off treating Walgreens as a classic value-trap.
WBA might look cheap to own on paper, but it may not be in a few years if its finances continue to deteriorate. Its business is unstable, and this makes it a bad investment unless you are a high-risk investor.
This post Pfizer, Eli Lilly’s new move intensifies Walgreens’ struggle may be modified as updates occur
This site is for entertainment only. Click here to read more
