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A quick note on Wal-Mart's (NYSE:WMT) highly (ridiculously over-?) publicized new generic drug promotion which today it announced would be rolled out nationwide earlier than expected.

It certainly isn't good news for Walgreen (NYSE:WAG), but I am not so sure it is all that bad either. A Bear Stearns analyst estimated that this new promotion could cost Walgreen as much as 7 cents per share per year in lost income. I cannot begin to speculate on the accuracy of this estimate, but nonetheless this represents only about 4% of Walgreen's trailing twelve months' earnings of $1.74. But Walgreen's stock has fallen over 15% since Wal-Mart made its announcement. So this could be a legitimate buying opportunity.

I also recommend checking out the press release Walgreen posted today on its website. Biases can be hard to disentangle in any press release, but the company does seem to be of the opinion that this is much more of a publicity move for Wal-Mart than it is a tactic of competition. (Wal-Mart has been criticized historically for its lack of attention to health care.)

Source: Walgreen's Response to Wal-Mart's Drug Assault