Tue Feb 18 15:00:00 UTC 2025: **Walgreens Downgraded by Moody’s Amidst Operational Challenges**

**CHICAGO, IL -** Walgreens Boots Alliance (WBA) faces increased market pressure following a Moody’s downgrade of its outlook from stable to negative. The downgrade reflects concerns surrounding the company’s multi-year turnaround strategy, which is being tested by a weakening consumer environment, inflation, reimbursement rate pressures, legal disputes, and the costs associated with planned store closures.

WBA shares fell slightly following the news, closing at $9.70 on Friday. This adds to a recent 22.5% decline in share price, underperforming both the industry and the S&P 500. The company’s first-quarter fiscal 2025 results revealed wider losses due to higher costs related to its store closure program. CEO Tim Wentworth declined to comment on takeover rumors, further impacting investor sentiment.

The company is battling multiple legal challenges, including a Department of Justice lawsuit alleging unlawful opioid dispensing and an arbitration award to PWNHealth. A class-action securities lawsuit further adds to its legal woes. For the first time in 90 years, Walgreens suspended its quarterly dividend to strengthen its balance sheet, a move negatively perceived by the market, especially in contrast to competitor CVS Health’s maintained dividend.

Despite these setbacks, Walgreens reports some positive developments. Its footprint optimization program, involving store closures, has shown promising prescription retention rates exceeding expectations. The company also highlights a refreshed merchandising strategy focusing on health and wellness, with increased own-brand product offerings and expanded omnichannel capabilities. Free cash flow improved by $363 million in Q1 2025 compared to the previous year.

While Moody’s remains cautious, Walgreens anticipates improved future performance from its smaller store footprint and enhanced product offerings. Analysts at Zacks Investment Research currently rate WBA a “Hold,” advising current shareholders to hold, but suggesting potential investors await a more favorable entry point.

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