JP Morgan Gives Update On Walgreen Company After Walgreens Week Day 1
Walgreen's (NYSE: WAG) healthcare businesses are included under the Walgreens Health Services umbrella. The company has generally pursued a “land and expand” strategy, where it may begin serving a customer with one component of their healthcare offering and look to add incremental pieces over time.
Walgreens has historically favored organic versus acquisitive growth, although healthcare M&A has picked up somewhat in recent years, as JP Morgan points to over a dozen healthcare transactions since 2005. We would not be surprised to see additional tuck-in deals going forward, especially as the company looks to deploy excess cash.
JP Morgan believes Walgreens is the fourth largest specialty pharmacy provider and it estimates the specialty pharmacy market was valued at roughly $43.9 billion in 2009, and expects growth to continue to outpace the overall pharma market. JP Morgan estimates Walgreens has about 5% share of the market, and expect it to continue to grow its presence, both internally and through acquisitions.
JP Morgan has a $43 PT and Neutral rating on WAG
WAG closed Monday at $39.93
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