Walgreens Boots Alliance (NASDQ: WBA) has been down and out for long enough that many investors have to be hoping a white knight can swoop in and save the day. Despite its recovery in recent weeks, this troubled pharmacy chain’s stock price is still down by some 80% in just the last five-year period. It was even booted out of the prized Dow Jones Industrial Average and has endured serious dividend cuts.

The good news is that there have been rumors and stories that a private equity-backed buyout may be forthcoming from Sycamore Partners. The bad news is the stock may have already overreached on its real buyout value — or the deal may not even happen at all.

Deutsche Bank is warning its clients that the Walgreens Boots Alliance shares have simply “run too far” on this merger speculation. The stock fell back under $10 to start February but had recovered to as high as $11.50 on the recent go-private possibility with Sycamore Partners.

As a result of the evaluation, Deutsche Bank downgraded WBA shares down to Sell from an already-cautious Hold rating. The firm also cut the price target down to $9 from the prior $11 price target. WBA’s stock was down 5% at $10.65 late on Friday after this research call.

Tactical investors may have decided that a buyout rumor was worth a risk. But any perception of a “take-under” would likely feel less than tactical if that is indeed the case.

The Financial Times had reported earlier in the week that the potential go-private deal from Sycamore Partners might include a 3-way break-up. Deutsche Bank believes that this deal could be a tough merger to complete at a premium to its current share price.

Deutsche Bank sees an especially challenged U.S. business operation. That said, the FT report mentioned that funding was in place for a deal. This would be impressive considering that Walgreens is still a $9.2 billion market cap even after the stock is down 80%.

One issue to consider is that Walgreens’ January-end earnings report for November offered guidance of $1.40 to $1.80 in adjusted earnings per share for 2025. That makes an acquisition seem cheap for a private equity firm buyout, at least on the surface. Where this gets complicated is that any would-be buyer would also have assume nearly $27.5 billion in short-term liabilities and another $39.8 billion in total non-current (long-term) liabilities.

While Deutsche Bank noted the FT article’s view that “financing is in place” it would be quite complicated to carve off the operations and to assign debt and assets properly. Deutsche Bank also believes any potential deal would likely not be consummated at a premium to WBA’s current stock price.

The 80% discount and low P/E ratio (before items at least) make a deal sound attractive. But adding up all the debt and the current stock value suddenly brings to light why Deutsche Bank would be concerned.

Investors can all make money when there is a premium buyout. It’s just hard to get excited about a potential “take-under” when the long-term share value has already been destroyed like it has been in WBA shares.

Tactical Bulls has no formal ratings or target on WBA shares. That said, Tactical Bulls would also remind investors and readers that no research report, including emphasized buy or sell ratings, should ever be the sole basis for an investor to buy or sell a stock.