Walgreens’ shares go back to the 90s, Micron fails to impress, and DS Smith bid could be back on track

“Shares in Walgreens Boots hit a 27-year low after the retail pharmacy group’s results fell short of expectations,” says Dan Coatsworth, Investment Analyst at AJ Bell.

“While there are plenty of people who bask in nostalgia, shareholders don’t want the shares harking back to levels last seen in 1997.

“The stock is now trading 87% below its peak level seen in 2015, suggesting that something has gone seriously wrong with the business.

“The rush to get vaccines during Covid led some people to believe pharmacies were going to see a sustained hike in business. Unfortunately for Walgreens, demand for Covid vaccines has waned, and competition keeps getting worse for pharmacy services and healthcare retailers. To make matters worse, US consumers are feeling less flush and so they’ve gravitated towards cheaper products. Its ambitious expansion involving doctor practices and clinics is also being scaled back.

“Last year chief executive Rosalind Brewer stepped down and was replaced by Tim Wentworth. He now has the toughest job in retail imaginable. Fixing a gigantic business such as Walgreens is a challenge and a half, and the market will have to wait longer for a turnaround judging by the latest results.”

Micron Technology

“While Micron beat earnings forecasts for the fifth quarter in a row, it wasn’t enough to win over the market. Investors appear to have pitched expectations far too high, believing the chipmaker would be fired up by red hot AI-related demand. They wanted a truly exceptional performance and all they got was a good one, leading to a sell-off in the shares.

“Naturally, that led to weakness elsewhere in parts of the tech space, including a 2% decline in Nvidia, and stopped the Nasdaq index in its tracks.”

DS Smith

“One of the biggest UK takeovers in a long time moved from the hard shoulder into the fast lane.

“International Paper has been trying to buy FTSE 100 packaging group DS Smith but the brakes were effectively put on the deal after Brazilian pulp maker Suzano threw a spanner in the works. Suzano had set its sights on buying International Paper, which might have scuppered the acquisition of DS Smith.

“Suzano says it will no longer proceed with a bid, leaving International Paper free to box up DS Smith. That put the UK stock at the top of the FTSE 100 risers list, with sector peer Mondi hitching a ride.

“It’s normal to see stocks move higher in a particular sector if one constituent is subject to takeover activity, as investors speculate other members could also be bid targets. There is nothing to suggest that Suzano might shift its attention to Mondi, but that hasn’t stopped investors bidding up the latter’s shares.”

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