Shares Of Walgreens Can Rise More Than 20% Through Its New Health Care Platform

Investors have the opportunity to snatch up shares of Walgreens Boots Alliance now that Loop Capital has advised them to do so.

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Walgreens' new healthcare platform should improve access to services for customers, according to analyst Joseph France, who initiated coverage of the company with a buy rating and a $45 price target.

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“We expect WBA’s core retail business to be strengthened and its growth and profitability accelerated by increasing its engagement with consumers over the next two years by lowering its costs and assembling a portfolio of health care providers over the past two years,” he wrote in a note on Wednesday.

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Loop Capital's comments come just weeks after Walgreens' U.S. healthcare segment's acquisition of Summit Health last year enabled it to beat expectations for the recent quarter and boost its full-year outlook as a result.

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According to France, the majority of Walgreens' potential upside in earnings, growth, and stock price for the next few years will come from these businesses as well as an investment portfolio that he estimates will represent more than half of the company's $40 billion enterprise value by the end of this year.

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“Our enthusiasm for WBA's new healthcare business is largely due to the company's launch of a national primary care platform, as well as the acquisition of new services for hospitals and the management of care at home,” he wrote, adding that the segment's growth in the near term will be mainly driven by its primary care clinics.

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He went on to say that these facilities should eventually be able to offer high margins, although a quick opening clip through 2027 can contribute to substantial losses, he said.

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Shares of Walgreens have dropped 3.4% in the past 12 months, and the firm's price target assumes a nearly 25% gain from Wednesday's closing price.