Investors looking for solid companies that offer a reliable source of growth may want to avoid the companies I’m listing below. They’ve all struggled with reduced cash flow, lower-than-expected full-year guidance, and possible bankruptcy.
Investors may see these companies as a “Buy” due to their reduced share price, but in my opinion, it’s difficult to make that case. These are companies that investors should watch from a distance, and if a turnaround happens, the idea of investing may become more reasonable.
Pfizer (PFE)
Pfizer (NYSE:PFE), headquartered in New York, NY, is a leading pharmaceutical company that produces a wide range of medications and vaccines to treat immune disorders, infectious diseases and inflammatory diseases. They also collaborate with biotech and healthcare companies such as Bristol-Myers Squibb, Myovant Sciences, Merck and BioNTech.
Within the last year, their share price has fallen by 50% due to poor financial guidance going forward, and they have continued to see a large drop in demand for treatments relating to Covid-19. On Oct. 31, they reported earnings for the third quarter of 2023, which stated that total revenue dropped by 42% compared to the previous year. Earnings per share for Q3 2022 was $1.54 per share, and in Q3 2023, it fell to a reported loss of $0.42 per share.
On Dec. 13, Pfizer released their full-year guidance, less than investors anticipated, within the range of $58.5 billion to $61.5 billion for revenue. That includes expected revenue from their new acquisition, Seagen (NASDAQ:SGEN), a biotech company focusing on oncology research and development of various therapies. Despite an overall market rally following the recent Fed decision regarding interest rates, their stock price fell by 7% to a 52-week low on their full-year guidance news.
Pfizer is currently struggling financially, mainly due to a massive fallout in the overall demand for COVID-19 vaccines, which, back during the pandemic, caused their stock price to surge. The company is one to watch to see if it gets to a point of revenue growth in the future.
AMC Entertainment Holdings (AMC)
AMC Entertainment Holdings (NYSE:AMC) is located in Leawood, KS, and they operate a movie entertainment business with interest in nearly 1,000 theaters in Europe and the U.S.
On Nov. 11, AMC released its earnings for the third quarter of 2023, and it stated that the total revenue grew by 42% compared to the previous year. Their net income for Q3 2023 was $12 million compared to Q3 2022, a net loss of $227 million.
Even with a number of new movies that were huge box office hits, such as Oppenheimer, Barbie and Taylor Swift: The Eras Tour, AMC share price is down by 80% year-to-date, mainly due to fears of possible bankruptcy for the company from a worsening financial situation.
AMC is considered a meme stock that has garnered popularity from investors on social media. They have seen wild fluctuations in their share price over the last few years. But, the overall trend is a steep decline, and with issues surrounding possible bankruptcy, AMC is a company it’s best to stay away from.
Walgreens Boots Alliance (WBA)
Walgreens Boots Alliance (NASDAQ:WBA) is located in Deerfield, IL. Walgreens is primarily an operator of retail locations that provide healthcare products and services. And they own the Boots brand, another healthcare retail business operating in the United Kingdom. Additionally, they own VillageMD, a client-based health service provider.
Over the past year, their stock price has declined by 40% due to issues regarding cash flow and their future business potential. Much like Pfizer is struggling from issues regarding slower demand for Covid-19 treatments, Walgreens is also dealing with a large reduction in sales from Covid-19 related products that grew their profits back during the pandemic.
However, they did see a slight increase in their share price on Dec. 12, following the news that they have renewed talks regarding the possible sale of Boots.
Despite the steep decline in share price, Walgreens still offers a massive dividend payout of 7.80% annually. Their most recent dividend payout given to investors was a quarterly dividend of $0.48 per share, which was paid out on Dec. 12.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
