Walgreens, FMC, EngageSmart-Vista Equity deal: Top Stocks

Walgreens (WBA) stock was upgraded to "Overweight" by JPMorgan analysts as new CEO Tim Wentworth transitions into his role on Monday. FMC Corp. (FMC) shares drop in Monday's afternoon session as the chemical company cut its guidance ahead of its third-quarter earnings due out on October 30. Lastly, EngageSmart (ESMT) shares pop as Vista Equity Partners intends to take the company private in a $4 billion deal.

Yahoo Finance Live monitors several trending stocks ahead of Monday's closing bell.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JOSH LIPTON: Let's move on to some trending tickers today. Let's start with Walgreens. Walgreens stock is higher in today's trade, climbing following an upgrade from JP Morgan. Let's talk about this one, Julie.

So JP, this one moving higher. JP Morgan goes overweight, which is equivalent of a buy. Price target is $30. Analysts say there is clear work to be done. They acknowledge there's some challenges here.

But they talk about the management team. They like the new CEO Tim Wentworth, former CEO of Express Scripts. Before her departure in August, remember CEO Rosalind Brewer pushed this company into areas like primary care providers.

So investors didn't love what they saw there. We know that. The stock got absolutely crushed. But maybe some hope on the street that some changes in the C-suite could change some things around here.

JULIE HYMAN: Yeah. The stock is down 40% so far this year, because investors have been concerned about the path that the company is going to take. The price target from JP Morgan is at $30. So from Friday's close, that would be about 40% upside, right? So we're covering at least some of those losses that we have seen thus far this year.

But-- and we are seeing a boost to the shares today. So we are seeing some optimism here. Cautious optimism. It seems to be coming back in. But I think people are waiting for more evidence of that going into next year as well.

Let's also talk about FMC. This is a company that makes pesticide and other agricultural products. The shares are down by 13%. It cut its guidance ahead of reporting its earnings next week, saying it is going to launch a cost structure review. And it comes as shares this year are down more than 50%, putting them on track for their worst year since the 1970s.

Now a lot of what is going on here for FMC has to do with what's happening in Brazil, that there's a glut of inventory in Brazil. There's a drought in Argentina. Obviously, these ag companies are very subject to what happens with the weather and with planting. So that is what's going on here with the company. It's not often that you see a forecast slashing like this, though.

The company now says for the third quarter, its adjusted earnings per share will be $0.44. It had been at least $0.90. So it is slashing that outlook by half.

JOSH LIPTON: Yeah. And analysts are getting to work as well. They're rethinking some of their targets. Wells Fargo keeps its equal weight. So equivalent of a hold there. But they do cut their target to $56 from $73. So pretty steep drop there.

JULIE HYMAN: Yeah, pretty steep drop there. And it also, by the way, is taking down other companies that are in this space, because if these are indeed larger factors that are affecting FMC, the thinking seems to be it should affect other companies. Corteva is one of those other companies, as well as CF Industries. Some of these other crop nutrients pesticide companies. So we're continuing to watch them as well.

JOSH LIPTON: All right. Final one here. Let's check out shares of EngageSmart.

They are in the green today. Nice pop, after it was announced it is being taken private by Vista Equity Partners. Each shareholders would receive $23 per share. It is the latest buyout deal in the tech sector and came with a $4 billion price tag.

So private equity firm Vista moves in here, Julie. They acquire the company Engage, which is a software company. Stockholders received $23 a share. Deal expected to close in the first quarter of 2024.

EngageSmart does have a 30-day go-shop period, meaning they can consider alternative offers. Engage earnings coming out November 2. Raymond James saying the deal is modestly below their previous base case target take out valuation on the company, though. We believe they say the valuation is fair.

JULIE HYMAN: Yeah. A couple of interesting things here. I should mention, first of all, Vista is going to own about 65% of EngageSmart. Its current owner, or one of its main current owners, General Atlantic, is going to keep the remaining 35%.

What's also interesting here is that at a time when we have seen somewhat of a slowdown in these kinds of acquisitions, Vista has-- led by Robert Smith, of course, has still been relatively active right here. They manage now more than $100 billion of assets, and really have this specialty and enterprise software, and have just built this incredible portfolio of those types of companies. We've seen deal activity slow down to some extent, of course, even for Vista. But they've been in contrast to peers. They've still been pretty active here in 2023.