Walgreens Stock Has a Potential Upside of 8.0% over the Next Year



Walgreens stock compared to its peers

Walgreens Boots Alliance (WBA) is currently trading at $86.08 as of December 19, 2016, which is ~2.2% below its 52-week high. The stock has risen 1.0% YTD (year-to-date). It has performed better than most of its peers and has also outperformed the S&P 500 Food & Staples Retail Index.

The S&P 500 Food & Staples Retail Index, of which Walgreens is a component, has fallen 0.60% YTD. Drugstore and healthcare supply chain peers CVS Health (CVS), AmerisourceBergen (ABC), and McKesson (MCK) have fallen 19.0%, 28.0%, and 25.0%, respectively.

WBA’s acquisition target Rite Aid (RAD) has risen 5.0% during the year.

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Wall Street recommendations for WBA

Walgreens is covered by 25 Wall Street analysts who have collectively given a 2.2 rating for the stock on a scale of 1.0 for “strong buy” and 5.0 for “sell.” The company has a better rating than Rite Aid, which has been rated 2.7. Competitor CVS, in comparison, has received a rating of 1.7.

Wall Street is positive on WBA. About 72.0% of the analysts have recommended a “buy” for the stock, and 28.0% have recommended a “hold.” There are no “sell” rating for the company. Rite Aid and CVS also don’t have any “sell” ratings.

Target price

Wall Street has assigned an average price target of $92.89 for Walgreens. That means that analysts are expecting WBA stock to rise 8.0% over the next 12 months.

CVS and Rite Aid have similar upsides based on Wall Street target prices. Rite Aid is expected to rise 6.0%, and CVS is expected to rise 9.0% over the next year.

Individual target prices for Walgreens range from $81 to $104. Barclays has assigned the lowest target price with a downside of around 6.0% over the December 19, 2016, stock price. Cowen has assigned the highest target price with an upside of roughly 21.0% over the next 12 months.

If you want exposure to WBA, you can consider the iShares US Consumer Services (IYC). IYC invests 2.5% of its portfolio in WBA.

To find out how WBA is currently valued compared to its peers, read the next part of this series.


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