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.
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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 

