Jump to content

Where to next for Walgreens shares as owner abandons sale of Boots chain?

Recommended Posts

Is the Walgreens share price likely to continue its slide as it halts the sale of Boots?

bg_stock_market_performance_365376363.jpSource: Bloomberg
 Axel Rudolph | Market Analyst, London | Publication date: Wednesday 29 June 2022 

Detrimental financial conditions made Walgreens pull the plug on its Boots sale

Citing tougher financial conditions following the upheaval in credit markets, Walgreens Boots Alliance, the owner of the UK pharmacy and beauty group Boots, announced on Tuesday that it has abandoned its sale of Britain’s biggest chemist as recent bids didn’t meet its expectations.

The US pharmacy company said on Tuesday that while there had been “significant interest” in the near 175-year-old business, it “has decided that it is in the best interests of shareholders to keep focusing on the further growth and profitability of the two businesses” and that an “unexpected and dramatic change” in the financial markets meant no offers had been received that reflected the potential value of Boots.

Boots and its related No.7 beauty brand account for around five per cent of its parent’s $132 billion in annual sales. American pharmaceutical company, Walgreens has been looking to sell its UK Boots and No.7 beauty brand since the end of 2021, with a formal review of its options beginning in January of this year.

However, Russia’s invasion of Ukraine, followed by rapidly rising interest rates in both the US and the UK, have made it very difficult for new issuers to operate within Europe’s high-yield credit market since financing any highly leveraged bids has become very costly.

Walgreens had apparently been looking for as much as £10bn when it initially put Boots up for sale, as it sought to focus on its US businesses but after several failed bids, some apparently coming close to their valuation earlier this year, it finally pulled the plug on the Boots sale as the financial environment for bids worsened. “As a result of market instability severely impacting financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No.7 Beauty Company”, the company stated.

Walgreens insisted, however, that the abandoned sale of Boots should not reflect badly on the performance of the main UK chemist or the No.7 brand, saying they were continuing to grow and perform strongly.

The US Boots owner also assured investors that it would continue to invest in the company, which has “exceeded expectations despite challenging conditions”.

Despite halting the Boots sale at present, Walgreens’ chief executive, Rosalind Brewer, signalled that the company will “stay open to all opportunities to maximise shareholder value.”

Walgreens weekly chartSource: ProRealTime

Where to next for the Walgreens Boots Alliance share price?

With the Walgreens share price down around 20% year-to-date and evolving in a clearly defined downtrend channel since the beginning of the year, and having this week topped out near its November 2021 low at $42.68 on the news that Boots is no longer up for sale, further downside looks to be in store.

While the 55-day simple moving average (SMA) continues to cap the share price on a daily chart closing basis, as it has been doing since mid-February, the current June low at $39.15 remains in focus.

If slid through, the late December 2020 low at $36.79 will be next in line, followed by the 78.6% Fibonacci retracement of the 2020-to-2021 advance at $36.15.

Walgreens daily chartSource: ProRealTime


Since one can clearly make out a series of lower highs and lower lows – the definition of a downtrend – the technical picture for Walgreens remains negative for now.

For the downtrend to be broken and reversed at least two daily chart higher highs and higher lows would need to be seen and take the Walgreens share price to above not only this week’s high but also above the May and current June highs at $43.95 to $44.75. Only then could one envisage the 200-day SMA at $46.22 being back in sight.

Below it the Walgreens stock is considered to be in bear market territory. Unless such a bullish reversal is seen in the days and weeks to come, further slides in the Walgreens share price are likely to ensue.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 17/05/23 10:51
  • Posts

    • Hi all. I have a chunk of cash sitting around and don't really want to allocate it to equities or anything too risky so I was hoping to pick up some regular coupons from something like non-junk bond. I've tried to find bonds on my ISA or Share Dealing account but they don't really seem to exist. I can't find bonds nor ETFs of bonds...  Also can someone help me to understand - like I don't want to bet on the value of bonds or rates going up. I only care about dumping cash in bonds and receiving regular coupons. I understand that the prices of bonds go up and down and therefore you may make a gain/loss on your principal if you sell before maturity, but I kinda want a low-risk bond and want to hold it to maturity. Or at least something that has that kind of risk-reward profile.
    • Brent crude oil, orange juice stabilise while copper advances as US debt ceiling bill gets signed Outlook on Brent crude oil, orange juice and copper as US House of Representatives approves bill to raise debt ceiling. Source: Bloomberg  Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Thursday 01 June 2023  Brent crude oil prices finds interim support The price of Brent crude oil, having dropped by over 6% over the past two days on possible weaker Chinese demand, a surprise build in US crude inventories and as Russia doesn’t adhere to its OPEC+ agreed output cuts, is stabilising. Better-than-expected Chinese manufacturing PMI from the private Caixin survey led to buying on Thursday and so far has taken the oil price back towards the $73.37 mid-May low which may act as initial resistance. Above it lies further minor resistance at the 17 May $74.02 low and also at the 22 May $74.47 low. On Wednesday Brent crude oil stabilised marginally above its $71.40 early May low, along the March-to-May support line at $72.20 on a daily chart closing basis. Earlier this morning it also acted as support. Only a currently unexpected drop through the $71.51 to $71.40 support zone would lead to the March trough at $70.09 being hit. Source: ProRealTime Copper recovery off its six-month low is gaining traction The price of copper is in the process of breaking through its two-month downtrend line at $8,130 per ton as the US House of Representatives approved a bill to raise the debt ceiling. It will now be sent to the Senate, which is expected to rubber stamp the bill before President Joe Biden can sign it into law ahead of June 5, when the US would be in default. If the copper price were to close on the daily chart above Tuesday’s $8,185 high, the last reaction high, it could extend its recent gains to the 200-day simple moving average (SMA) at $8,373. This technical view will remain valid as long as the last reaction low, that is Wednesday’s low at $8,038, underpins on a daily chart closing basis. Source: ProRealTime Orange juice price flirts with uptrend line Front month orange juice futures have come off last week’s all-time record high at $2.8721 and are likely to retest their one-month uptrend line at $2.7030 as Brazil may increase its supply. If slid through, the 8 May high at $2.5348 would be eyed with further potential support sitting at last week’s $2.6663 to $2.6430 price gap. Resistance remains to be seen around the $2.8038 April high. Source: ProRealTime
    • Dow and CAC40 stabilise while Nasdaq 100 edges down The Dow and CAC40 have rallied off their Wednesday lows, while the Nasdaq 100 has moved lower after its fourteen-month high earlier in the week. Source: Bloomberg  Chris Beauchamp | Chief Market Analyst, London | Publication date: Thursday 01 June 2023  Dow holds above 200-day MA The index saw a rally off the lows of yesterday’s session, defending the 200-day simple moving average (SMA) once again. However, the overall lower from the highs of May has yet to be disrupted, so further upside would be needed to suggest that a low has been created. A move above 33,230 would help to bolster such a view, and might then open the way to a rebound towards the mid-May high at 33,690. A reversal below the 200-day SMA opens the way to the low seen last week around 32580. Source: ProRealTime Nasdaq 100 edges lower A drop yesterday saw the index add to its decline from the one-year high hit on Tuesday. The upward move is still firmly intact, but it may be overextended in the short-term. Trendline support from late April could come into play closer to 14,000. A deeper retracement might develop with a move below 13,700. A renewed move higher could target the late March 2022 highs at 15,210, but a consolidation after the recent run higher remains a distinct possibility. Source: ProRealTime CAC40 hits trendline support Losses here accelerated to a fresh two-month low yesterday, although it has rallied off the lows of the session. The longer-term uptrend is still intact, though it has taken a knock since the April peak. A recovery above the 100-day SMA would help to reinforce the view that a higher low is in place, and that a move back to 7600 and potentially higher could be in play. The price has stabilised around another potential trendline support level from the December lows. Should this hold then the bullish view could receive additional support. Below this the March low at 6785 comes into view. Source: ProRealTime
  • Create New...