How UnitedHealth Should Give A Boost To Walgreens' 2017 Guidance

Analyst's Take

Analyst Robert Willoughby sees the 12 percent increase in UnitedHealth's OptimumRx adjusted scripts as a positive for Walgreens given that the latter is UnitedHealth's preferred provider of 90-day prescriptions. The analyst noted that UnitedHealth's total healthcare membership rose 4.4 percent year-over-year to 48 million lives, with Medicare and Medicaid lives rising 8.4 percent and 9.1 percent, respectively.

Credit Suisse clarified that its earnings per share forecast for Walgreens does not include contribution from Rite Aid Corporation RAD's stores starting in January, Rite Aid's PBM business or any deleveraging or refinancing efforts.

Related Link: Walgreens-Rite Aid Merger Is In Some Trouble Thanks To Kroger

The firm noted that its model also doesn't include a UnitedHealth contribution or anything from its other deals across the supply chain. Additionally, Walgreens' role as the anchor pharmacy in Express Scripts Holding Company ESRX's Diabetes Care Value Program is not included, the firm noted.

Concluding, Credit Suisse said it may be difficult for Walgreens to guide to the high end at this juncture, given a host of variables in play. That said, the firm said it would revisit its $4.85 per share estimate when more clarity emerges.

As such, Credit Suisse has an Outperform rating and $95 price target on the shares of the company.

At time of writing, shares of Walgreens were down 1.43 percent at $76.96.

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