This post was just published on ZYX Buy Change Alert.
WBA is long from $29.60. As of this writing it is trading at $81.26. RAD is long from $4.95 and is trading at $7.54 as of this writing. Partial profits have previously been taken on RAD. Walgreens Boots
RAD stock has fallen from about $8.61 on speculation that government’s antitrust lawyers are not happy with planned divesture of some RAD stores to FRED.
RAD has a buyout offer from WBA for $9 cash. The stock is trading at a substantial discount to the offer because of the concern that the government will not approve the buyout. To satisfy the government, WBA has agreed to divest a large number of RAD stores, FRED has agreed to buy them.
In the big picture, if the buyout is approved, in the U. S. drug store business there will be a duopoly between WBA and CVS. Hence the concern about the merger not being approved is legitimate.
WBA contends that FRED will become the third big competitor.
What To Do About WBA Now
WBA buy zone remains $68 to $77.67. The buy zone is designed for a 70% probability of a fill over the next 120 days. Target zone remains $122 to $126. This is a very long-term position. Recommended position size is 10 – 50% of the full core position size. Stop zone remains $53 to $54.73, but should be a mental stop.
What To Do About RAD Now
Consider taking partial profits on all but 15% of the full core position size in RAD right here.
Those not in RAD may wait for a signal on the Real Time Feed.
Disclosure On FRED
ZYX Short Sell Change Alert had taken a short position in FRED when FRED had spiked on news of buying RAD stores. Earlier today we booked nice profits on FRED. For your convenience the post from ZYX Short Sell Change Alert is reproduced below.
FRED FALLS ON POTENTIAL ANTITRUST ISSUE, TAKE PROFITS RIGHT HERE
FRED is short from $21.50. Take profits and exit the position. The stock is trading at $14.83 as of this writing. The stock is now in our target zone. The stock has fallen on potential antitrust concerns regarding RAD buyout by WBA.
Consider taking profits and exiting the position right here.
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