In short, WBA made a buyout offer for RAD in the fall of 2015. More than a year-and-a-half later, the parties -- now involving Fred's, Inc. (FRED) -- had yet to satisfy the concerns of the FTC, despite agreements to divest a number of locations. While reports of approval and denial flew both ways leading up to a decision earlier this summer, WBA suddenly abandoned the cause.
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After paying a $325 million breakup fee, Walgreens then agreed to buy 2,186 stores for $5.2 billion, acquiring about half of Rite Aid's locations. And that's where we stand now. WBA stock is essentially flat over the past two years, down less than 6%. Total returns are closer to flat though, when considering the now-2% dividend yield.
Friday analysts at Loop Capital showed WBA some love. Andrew Wolf initiated the stock with a buy rating and $95 price target. The target suggests potential upside of about 18.75% from WBA stock's most recent closing price of $80.50. Analyst Wolf says a return of "core profit growth" beginning at the end of 2017 and pushing into 2018 is the reason behind the move.
At the same time, Wolf started CVS Health (CVS) - Get Report with a hold rating and $83 price target. Despite the hold rating, Wolf's price target still implies about 10% upside in CVS stock. He argues that Walgreens has taken share in the pharmacy benefit manager business and will continue to do so in 2018.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.