On Feb 24, 2015, Zacks Investment Research upgraded Walgreens Boots Alliance (WBA) to a Zacks Rank #2 (Buy). The completion of Step 2 of the Walgreens and Alliance Boots merger deal saw the formation of the world’s first pharmacy-led, health and wellbeing enterprise – Walgreens Boots Alliance – in Dec 2014.
Since then, shares of Walgreens Boots have been witnessing an upward trend. The stock is currently hovering around its 52-week high of $80.41 and has increased 5.7% year to date.
Why the Upgrade?
Investors seem upbeat about Walgreens’ merger deal with Alliance Boots, with the completion of which, legacy Walgreens has successfully become a fully-owned subsidiary of the new company.
Ever since the strategic partnership began in 2012, Walgreens and Alliance Boots have achieved several significant goals including successful synergy generation, a joint own-brand sourcing program in Asia and the sharing of best practices and innovative technologies. The completion of this strategic transaction marks another breakthrough for both the companies.
We are also upbeat about Walgreens Boots’ new three-year ‘Next Chapter Plan’ through fiscal 2017 that will set strategic goals for the combined company and maximize its scope and scale over time. The plan will reflect significant value-creating opportunities for the combined enterprise to drive long-term shareholder value. Under this plan, the combined company will establish goals for fiscal 2016 including revenues of $126–$130 billion and adjusted earnings per share of $4.25 to $4.60.
Coming back to Walgreens’ earnings, in its fiscal first quarter, the company posted impressive earnings and revenues, both of which outshined the respective Zacks Consensus Estimate.
Evidently, to revive growth, management has undertaken the strategic decision to win high value senior notes through its relationship with Medicare Part D plans by enhancing 90-day at retail and expanding vaccines and other preventative care services. Walgreens, in its recent effort to boost its market presence, has decided to focus on supply chain performance.
Zacks Rank
Some other top-ranked stocks in the broader health care are Abaxis, Inc. (ABAX), Vascular Solutions Inc. (VASC) and Phibro Animal Health Corp. (PAHC). All the three stocks sport a Zacks Rank #1 (Strong Buy).
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