Walgreens Added To Credit Suisse Focus List

Credit Suisse’s Robert Willoughby believes the successful closing of the Rite Aid Corporation RAD in H2:16 could help Walgreens Boots Alliance Inc WBA achieve significant revenue growth, cost savings and cash flow opportunities to drive Walgreens’ stock meaningfully higher.

Willoughby maintains an Outperform rating on Walgreens with a price target of $95.

Deal To Close Successfully

Adding the stock to the Credit Suisse Focus List, the analyst mentioned there was limited downside to the deal not closing as expected “given new and potentially more preferred pharmacy network agreements with the leading PBMs, contributions sooner than expected from the early AmerisourceBergen Corp. ABC warrant exercise, and ongoing capital deployment.”

Related Link: Are We There Yet? A Timeline Of The Walgreens-Rite Aid Merger

Benefits And Risks

Willoughby believes Walgreens Boots Alliance stands to benefit in the near term from continuing working capital and cost management opportunities, clarity on the closing of the Rite Aid deal and additional expansion of the company’s payor relationships.

However, there are also potential risks, such as reimbursement challenges, weak trends in front-end sales and the risk of the Rite Aid acquisition failing to close successfully.

“The Rite Aid deal, AmerisourceBergen warrant exercise, and PBM relationships should be additive to EPS and our longer term ROIC view,” Willoughby added.

Full ratings data available on Benzinga Pro.