Why Walgreens Boots Alliance stock soared today

What happened

You can’t keep a good stock low, and it was abundantly clear on Friday that dozens of investors are considering Walgreens Boots Alliance (WBA 4.04%) to be a good stock. A day after receiving a quarterly earnings report that many saw as subpar, shares of Walgreens rose 4% on Friday. That won S&P 500 2%-plus bull run on the index.

So what?

Much of it was a “that wasn’t that bad, really” reevaluation of Walgreens first quarter of fiscal year 2023 the results, which were released Thursday morning.

By the end of the trading day, the stock had hit its price by nearly 8%. Investors worried about the company’s year-over-year sales decline for the period and its weak guidance for the full fiscal year (although it made a slight upward revision to its revenue forecast). Management also acknowledged that it would abandon its recent strategy of growth through acquisitions.

As is typical when a company delivers a less-than-inspiring quarter, several analysts turned more bearish — albeit slightly — on Walgreens’ outlook after the earnings release.

On Thursday, Elizabeth Anderson of Evercore ISI lowered her target price to health supplies to $36 per share from the previous $40, while maintaining a built-in (read: neutral) recommendation. The next day her peers AJ Rice Swiss credit and JPMorgan ChaseLisa Gill followed suit. Both previously pegged the stock at a fair price of $42 per share. Rice cut that to $41, while Gill went $1 higher to $40.

Now what

Markets often overreact right now, and that seemed to be the case with Walgreens on Thursday. This set of wins certainly wasn’t one for the ages, but it didn’t deserve the sell-off it spawned. Friday’s investor “correction” was completely understandable.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Eric Volkmann has no position in any of the stocks mentioned. The Motley Fool has positions and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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