WBA inventory positive aspects as Deutsche Financial institution points Purchase score with Avenue excessive goal (NASDAQ:WBA)

Walgreens Boots Alliance (NASDAQ:WBA) added ~2% pre-market Friday after Deutsche Financial institution issued the primary bullish score on the pharmacy retailer, upgrading it to Purchase from Maintain with a Avenue excessive worth goal of $50.

The analyst George Hill attributes his choice to Walgreens’ (WBA) recently-announced choice to amass the well being care supplier Summit Well being by way of its majority-owned VillageMD enterprise in a deal anticipated to shut in Q1 2023.

The transaction will place Walgreens (WBA) through VillageMD as one of many “largest investor-owned multi-payer major care companies” within the U.S. behind UnitedHealth (UNH), with greater than 700 places producing $8B in income on the finish of 2023, the analyst argued.

“We totally acknowledge that the front-end and back-end pharmacy enterprise are and sure stay challenged,” Hill wrote, including, “but with investor & sell-side sentiment so low (DB is the one Purchase), we see a 2:1 constructive danger/reward skew from right here.”

Citing discussions with the administration, the analyst notes Walgreens’ (WBA) plans to pivot from a pharmacy-led healthcare enterprise to a client healthcare providers firm with broader ambitions the place its pharmacy enterprise will play a key position.

“If mgmt. can execute on its technique, we see each upside to road numbers and a number of revisions,” Hill added.

The improve comes at a time when Walgreens (WBA) has underperformed its rival CVS Well being (CVS) and the broader market this yr with a ~27% decline, as indicated on this graph.