Goldman Sachs has downgraded the Walgreens’ shares to a rare status of sell with a doubt whether the pharmacy chain’s plan to revamp the drugstore business will work or not. As a result, the shares of the latter dropped by 4%, which were up by about 9% early this year. Walgreens has been facing a skeptical approach from the market as CVS Health, the rival drugstore business attained $70 billion acquisition of Aetna, the health insurer.
The drugstore chain has been through various partnerships in its span that include LabCorp a diagnostic company, health insurer company Humana, chain of grocery Kroger, Sprint the telecom giant, and package delivery firm FedEx. These associations were planned to boost the traffic to the drugstores of Walgreens, which have experienced a serious decline in the footfall due to the increased inclination towards online shopping. Walgreens and Humana have also discussed the probabilities of the deal while Jones is worried about whether the current leverage of Walgreens will limit the deal.
Robert Jones, an analyst from Goldman Sachs believes that even if the company conjugates with the biggest names in the market, it will fail to reject the possibilities of decline in the core regions of the pharmacy business. Hence, he decided to downgrade the shares of Walgreens from hold to sell.
Sell is a rare condition on Wall Street as Robert Jones is the only analyst who has a rating of sell on Walgreens, which is already associated with 8 holds and 3 buys.
Wall Street has seen some interesting changes in the trend as Amazon entered the business of prescription drug delivery after acquiring PillPack, the online pharmacy.
However, the direction of the market is highly improbable and yet to be seen as Donald Trump has committed to depleting the prices of the prescription drug.