Will Wal-Mart's Drug Price Cuts Affect Other Pharmacies?
-
Font Size:
Wal-Mart Stores Inc.’s (WMT) latest push into the growing healthcare market, with lower prices on prescription and over-the-counter drugs, may be “evolutionary, not revolutionary,” says UBS analyst Neil Currie, but it’s still a good move that supports the retail behemoth’s growing reputation as pharmacy discounter.
On Monday, Wal-Mart announced enhancements to its $4 prescription drug program, offering a 90-day generic drug prescription for $10. It also expanded the program to include additional women’s health medicines and rolled back prices on roughly one-third of its OTC medicines to $4 or less. The price reductions “will continue to expand healthcare access to the lower-income demographic,” says Mr. Currie in a note to clients, adding it would be “serving the underserved market.” The world’s largest retailer says it has saved consumers C$1.16 billion since starting its $4 generic-drug program in 2006.
But Mr. Currie says that the existing program has had a muted impact on retail drug stores like Rite Aid Corp. (RAD), CVS Caremark Corp. (CVS), and Walgreen Co. (WAG), he says, “as they serve distinctly different customers.” He adds that there is potential for a greater impact to drug stores from Wal-Mart’s decision to offer greater rollbacks on more than 1,000 generic versions of OTC medications such as Zantac, Claritin, and Pepcid.
While he expects Wal-Mart’s actions will have a near-term impact on investor sentiment towards Rite Aid, CVS and Walgreen, Mr. Currie says the long-term prospects for pharmacy retailers are rosier, and he is retaining his buy recommendations on both companies.
Get Free Stock Alerts by Email!
-
Editor's Picks
-
Most Popular
- Nationwide WiMAX: Who Benefits?
- Take Two's New GTA Game Sells Well; EA: “Nothing Has Changed”
- Should We Force a Housing Bottom?
- 6 Signs of a Range-Bound Market
- Currency, Precious Metal and Futures ETFs: Don’t Get Caught in the Tax Trap
- Keeping Score of Global Stock Markets' Returns and Valuations
- Full list of Editor's Picks »
-
Long Ideas
-
Short Ideas
-
Cramer's Picks
- United Online's Future Looks Rosy - Barron's
- Be a Pepper - Barron's
- Cameron: An Oil Services Bargain - Barron's
- DirecTV: Surging Stock Price, Plenty of Potential
- Copa Holdings: Generates Decent Profits Despite Oil Price
- SuperValu is Undervalued - Barron's
- Disney: Close to Invincible - Barron's
- SunPower Buy Opportunity?
- Insider Buy Signal at Parlux Fragrances
- Alloy Steel Submits the Perfect Quarter
- Full list of Long Ideas »
- Why You Should Short Companies Doing Share Buybacks
- SEC Selloff - Fast Money (5/7/08)
- Liquidity Preferences: Molson Coors vs. Starbucks
- Three Short Ideas: Standard Pacific, Under Armour and Trump Entertainment
- Bored with Yahoo's Board - Fast Money Recap (5/6/08)
- Short Sellers Give Microsoft, Yahoo Wide Berth
- Sprint Nextel: A Short on Today's Gap-Up
- What to Do About Yahoo? - Fast Money Recap (5/5/08)
- Summer in the Citi - Fast Money Recap (5/2/08)
- Pacific Capital Bancorp: Evasive Maneuvers
- Full list of Short Ideas »
- Retail Sale - Cramer's Stop Trading! (5/8/08)
- Call the Koppers - Cramer's Lightning Round (5/8/08)
- Coach is a Winner - Cramer's Mad Money (5/8/08)
- Fannie's Cut-Off Shorts - Stop Trading! (5/7/08)
- Methanex Not the Cat's MEOH - Cramer's Lightning Round (5/7/08)
- 3 Victim Stocks - Cramer's Mad Money (5/7/08)
- Deutsche Treat - Cramer's Lightning Round (5/6/08)
- Comcast at Last - Cramer's Mad Money (5/6/08)
- Cramer's Four Horsemen Back in the Saddle
- Emcor: Not Just Copper - Cramer's Stop Trading! (5/5/08)
- Full list of Cramers Picks »
Most Popular Feeds
-
ETFs
-
US Market
-
Long Ideas
-
Alt. Energy
- Full list of feeds »


This article has 4 comments:
I would much rather listen to Goldman Sachs & The AP. While I’m not a fan, I also would rather listen to Cramer.
Either way, I certainly do not want to listen to a blogger, and that’s exactly what WE are – bloggers. Nothing less! Nothing more!