Walgreens Management Confidence In Rite Aid Merger Overshadows Growth Concerns

Investors have wondered if the proposed Walgreens Boots Alliance Inc WBA, Rite Aid CorporationRAD merger will go through, as it has been in the works for months.

It is now looking more likely after Walgreens management provided some confident statements on Thursday that the deal would close in 2017. Management also dismissed media reports that the Rite Aid deal was "imperiled," said Barclays.

"Sounding of the all clear on RAD is positive and we were not surprised to see the shares move higher given the substantial synergy opportunity available to WBA over time," said Barclays analysts.

Related Link: Large-Cap Wall Street Stalwarts Consider Consolidation

Barclays also stated, "Core FY17 guidance confirms that recent commercial agreements have required significant price concessions in return for volume expansion."

As a result, Barclays increased its FY17 estimate to $5.01 from $4.94 to incorporate Rite Aid. The deal is expected to be completed on January 27th and will add 3,775 stores to Walgreens' portfolio.

Barclays reiterated its Equal-Weight rating on Walgreens with a $79 price target.

At last check, Rite Aid was down 0.98 percent at $7.04, and Walgreens was up 0.37 percent at $81.32.

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