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Walgreens Is Going to Lose Out on Rite Aid — This Analyst Sees Something Else Playing Out

Analysts at Needham on Wednesday initiated stock coverage on Walgreens Boots Alliance ( WBA) with a "Hold" rating, while commentating on the looming FTC decision on the pharma giant's acquisition of rival Rite Aid ( RAD) .

"We expect the FTC will oppose WBA's proposed acquisition of RAD by the July 7 deadline," Needham analyst Kevin Caliendo argued. "We do believe that WBA will litigate and perhaps can structure a transaction for a smaller portion of RAD at a lower price."

If the FTC were to approve the deal by the deadline, it could provide a 25 cent boost to Walgreen's full-year 2019 earnings and help it form the largest retail pharmacy network.

Nonetheless, Caliendo contended that Walgreen's management has done a "commendable" job leveraging its retail network to land partnerships with pharmacy benefit managers (PBM), a...