Walgreens Boots Alliance Inc (NASDAQ:WBA) stock was formed in 2014 when Walgreen’s merged with UK-based Alliance Boots. The combined company now has stores in more than 25 countries and has over 400,000 employees.
It has also built one of the world’s largest pharmaceutical wholesale and distribution networks, which is not just impressive because of its size, but because it represents the future of big growth in the retail drugstore space.
You see, behind the scenes of your local Walgreens, there is a massive machine that manages the all the prescription drugs, works with insurers and drug companies on pricing and coverage and a myriad of other aspects of this crucial healthcare business.
And what’s driving this business is a major demographic shift as the U.S. and Western European countries’ populations get older as well as the cost management goals of insurers combined with the pricing needs of the pharmaceutical companies.
We are living the effects of what happens when a nation’s healthcare system is in need of direction but instead is being pulled apart from every side because of the uncertainty of the current system.
One thing that’s certain is the first line of healthcare — medicine — is the most cost-effective way to treat many chronic issues that a graying population are experiencing. And this is precisely where WBA’s size and scope are true competitive advantages.
Recently, WBA has been trying to acquire its floundering competitor Rite Aid Corporation (NYSE:RAD). The deal hit some snags but the two have come to an agreement that certainly works to WBA’s advantage.
WBA stock has been in a holding pattern since the $17 billion deal fell through but in the end, WBA may be better off with the deal it cut on the side with RAD. According Yahoo! Finance, WBA can buy nearly half of all RAD’s stores at ‘deal value,’ which about 1/3 the original price. That is certainly a good deal for WBA.
And WBA also recently signed a deal with FedEx Corporation (NYSE:FDX) to provide the logistics company with drop-off and pick-up services at several its US stores. Looking for new sources of income demonstrates WBA’s drive to build a solid future.
Bottom Line for WBA Stock
This is a very competitive space, to be sure. And it’s one reason WBA is essentially treading water so far this year. The other of course is the Amazon.com, Inc (NASDAQ:AMZN) effect, where every brick and mortar store will somehow be destroyed by AMZN.
WBA stock is reflecting more of its past than its future and much of that is fear-based on the investor side. This is a great time to take advantage of a shareholder friendly company with a sturdy, nearly 2% dividend yield and lots of growth potential.
— Richard Band
[ad#IPM-article]
Source: Investor Place