What Happened?

Shares of pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) fell 12.3% in the morning session after the US Department of Justice accused the company (Walgreens) of filling millions of unlawful opioid prescriptions. According to the complaint, Walgreens overlooked major red flags and pressured pharmacists to dispense these medications, then sought reimbursement from federal programs in violation of the False Claims Act. Although Walgreens denies any wrongdoing, the stock's reaction suggests investors are wary of the uncertainty this legal battle may create.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Walgreens? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Walgreens’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for Walgreens and indicate this news significantly impacted the market’s perception of the business. 

The previous big move we wrote about was 11 days ago when the stock gained 26.2% on the news that the company reported impressive fourth-quarter results, which blew past analysts' revenue and EPS expectations. Adding to the positives, full-year EPS guidance came in above expectations. The company continued to expand its footprint while keeping its cost structure lean, and the results indicate that some of these efforts are already paying off. Overall, we think this was still a strong quarter.

Walgreens is up 18.9% since the beginning of the year, but at $10.93 per share, it is still trading 53% below its 52-week high of $23.25 from January 2024. Investors who bought $1,000 worth of Walgreens’s shares 5 years ago would now be looking at an investment worth $202.86.

When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.