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Wall Street Sees a 22% Upside in Walgreens

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Wall Street recommendations on WBA

Walgreens (WBA) is covered by 25 Wall Street analysts. The company has received a rating of 2 on a scale of 1 (or strong buy) to 5 (or sell). It has 72% “buy” and 28% “hold” recommendations and no “sell” recommendations. Jefferies, Mizuho, Wells Fargo, and Atlantic Equities are among the brokers that have “buy” ratings on the stock.

Competitor CVS Health (CVS) is also rated a 2, with 72% “buy” and 28% “hold” recommendations. Rite Aid (RAD), however, has been given a rating of 2.6. The company has 43% “buy” recommendations and 57% “hold” recommendations.

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Target price comparisons

Walgreens is trading at $76.37, ~15.2% below its 52-week high. Wall Street sees a strong upside to the pharmacy giant’s stock price and has assigned it an average target price of $93.41. This target price indicates a potential upside of 22% over the next 12 months. The individual target price for the company ranges between $79 and $100.

Rite Aid, which is currently trading at $3.08, has a price target of $6.19 with a more than 100% upside. Walgreens has offered a price of between $6.50 and $7.00 to Rite Aid’s shareholders.

Valuations

Walgreens is currently trading at one-year low valuation. It has a one-year forward earnings multiple of 14.5x. In comparison, CVS Health (CVS), America’s largest drugstore chain, is valued at 13x, while healthcare supply chains AmerisourceBergen (ABC) and McKesson (MCK) are valued at 16x and 13.6x, respectively.

ETF investors seeking to add exposure to WBA can consider the iShares US Consumer Services ETF (IYC). IYC invests 2% of its portfolio in WBA.

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