Analyst Michael Cherny of Leerink Partners reiterated a Hold rating on Walgreens Boots Alliance (WBA – Research Report), retaining the price target of $11.50.
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Michael Cherny’s rating is based on the financial challenges Walgreens Boots Alliance (WBA) faces regarding its cash flow obligations. The company’s decision to suspend its dividend has brought attention to its cash management, particularly with obligations like operating lease payments that are largely non-negotiable. While the suspension itself doesn’t point to immediate liquidity issues, it highlights the need for WBA to enhance its cash flow generation to sustain its multi-layered turnaround strategy.
Cherny’s analysis estimates that WBA will have annual cash requirements between $6.0-8.0 billion from FY25-FY29, with operating lease obligations being the largest component. Though there is some flexibility with capital expenditures, more significant changes will be required by FY27 when substantial debt obligations are due. The Hold rating reflects the company’s existing strategic initiatives, which aim to improve free cash flow, alongside potential asset sales and debt refinancing, albeit at higher rates.
In another report released on January 31, Evercore ISI also maintained a Hold rating on the stock with a $12.00 price target.