Minimal Headwinds To The Acquisition
Analysts George Hill and Stephen Hagan think private equity could come in only as a last resort, citing the challenges of operating a small pharmacy business, which would result in lower negotiated prices. They pointed out the kind of investment required in managing the retail firms.
Therefore, the brokerage is confident that Walgreens would like to sell its stores based on the negotiating power and the competitive space. The firm also thinks the regulator would mostly prefer stores to be sold to strong rivals to keep the existing level of competition before the Rite-Aid acquisition.
Deutsche Bank revealed in a research note, “We note that the sales process could take longer than expected and longer than recently indicated by WBA management (deal period extended through January 2017), but we do not believe there is a real reason for this deal to not get done. We would not be surprised to see the process extend into mid 2017.”
Therefore, the brokerage maintains its Buy rating on Walgreens shares with a target price of $88.
At last check, Walgreens traded up 1.84 percent to $81.54. Rite Aid was flat on the day at $6.87.
Image Credit: By EricMiller214 - Own work, CC BY-SA 3.0,
|Apr 2016||Deutsche Bank||Downgrades||Buy||Hold|
|Mar 2016||Credit Suisse||Assumes||Outperform|
|Jan 2016||Evercore ISI Group||Downgrades||Buy||Hold|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.