Walgreen Co. (NYSE:WAG), the nation's largest drugstore chain by store count, has had its stock target price lowered by Merrill Lynch Canada analyst Patricia Baker. Baker has edged down her 12-month price target to $54 from $56 as she worries about the competitive threat from mighty Wal-Mart Stores Inc. (NYSE:WMT), which has recently began a major shift, lowering prices on over 300 generic prescription drugs in its pharmacies.I posited this fact back in October when Wal-Mart first announced its new pharmacy pricing program. I think there will be negative impacts to the businesses of both CVS Corp. (NYSE:CVS) and Walgreen's in 2007 as the full effect of Wal-Mart's drastic prescription drug price cuts is felt. How much will the nation's two largest drug chains feel the pinch? That is a good question.
Wal-Mart's program has not had enough time to be properly measured, and Baker says she hasn't seen any sign yet that Wal-Mart is eating into Walgreen's sales, but, she says uncertainty is increasing. The fact that Walgreen's competitor CVS is merging with Caremark Rx Inc. (NYSE:CMX) managed healthcare should most likely only add to the broiling temperatures in Walgreen's in 2007.
CVS Drugstores, the nation's largest chain of specialty drug retail stores, reported that its November same-store sales growth topped the 8.4% mark for November, 
With Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp (NYSE: TGT) set to challenge the traditional drug store chains as they lower prices on prescription generic drug, what is in store for national chains like CVS Corp (NYSE: CVS) and Walgreens? You'd never know that CVS feels threatened, yet, especially after the retailer 
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