Walgreens Boots Alliance Target Boosted From $88 To $107 At Citi

In a report published Monday, analysts at Citi maintained their Buy rating on Walgreens Boots Alliance Inc WBA, while raising the price target from $88 to $107. The analysts expect the company to see significantly faster earnings growth than its peers going forward. Various factors have come together to prompt the analysts to revise their target price and EPS estimates upwards for the company. One of the major factors is the realization of the merger synergies, which is likely to be incremental by $159 million in 2015, while rising to $350 million in 2016. Cost savings benefits are also likely to compound by FY16, bringing in larger benefits than in FY15. "ABC sourcing benefit increases more each year out, and the company has an ability to exercise a warrant for an additional 8% stake in ABC in March 2016, which is likely to be exercised based on the current favorable strike price. Thus, the company would likely receive equity income from the additional stake and with their two board seats, they could better align their interests in sharing the sourcing benefits," the analysts added. According to Citi, "If the company successfully executes on its target for AB synergies, as well as achieves $300mm incremental cost savings (out of the $1.5bn target by 2017), this would drive $0.43 of the step-up in FY16."