Walgreen Company (WAG), first written about here on February 17, 2009 at a price of $25.46, has pulled-back slightly, to about $41 after testing $44 in the winter, and if you haven't already, now would be a good time to consider taking some profits, if you're in at/near $25.50.

Others who can tolerate the risk can maintain their full position in WAG, as the uptrend is likely to resume after this respite.

Look for drug store chain giant Walgreen's revenue to rise about 4-6% in FY2011, boosted by the addition of about 250 net new store openings. The front-store traffic trend in this more than 8,300-store chain should receive a modest tailwind from store remodelings, and back-store (pharmacy) margins should be adequate, aided higher-margin generic drugs.

Walgreen Company (WAG), first written about here on February 17, 2009 at a price of $25.46, has powered higher, clearing $40 resistance, and if you're in at/near $25, now may be a good time to consider taking some profits.

Drug store chain giant Walgreen's revenue should rise about 3-5% in FY2011, boosted by the addition of about 300 net new store openings. The front-store traffic trend in this more than 8,000-store chain is being hurt by a slower-than-expected U.S. economic recovery, and back-store (pharmacy) margins are not rising as fast as expected, due to a slower roll-out of higher-margin generic drugs.

Even so, Walgreen locates many of its stores in high-traffic spots, which means WAG is well-positioned when the U.S. economy starts to add jobs in a sustained way, and traffic improves.

Rite Aid Corporation (RAD) may have reported a narrower loss this morning, but you know what? I'm still not going to buy it. As I write this, the stock is up almost 7% on great volume. The quote? $1.08. Yep, it's one of those low-priced equities.

The one-year chart relates a tale of volatility and risk. Nothing more than a vehicle for gambling, if you ask me. Wall Street players who buy Rite Aid are betting on a turnaround. I really don't see the pharmacy chain being worth the trouble right now on that count. Sure, you could invest in the concern and be surprised by a positive change in fortunes down the road, but what if that positive change doesn't occur? Well, the answer is, you'd incur opportunity costs for having capital tied up in a less-than-acceptable fundamental thesis.

Walgreen Company (WAG) stock is in need of a prescription against the bad reaction it's experiencing after issuing its fiscal third-quarter report. At the time of this writing, shares of the pharmacy chain were down over 6% to $28.26. That's not too far off from the 52-week low of $27.89.

Here's the kind of chart that can mess you up. On the one hand, you might look at it and conclude that now may be the time to buy since the stock was doing so well before; you would believe you were buying low with the intent of selling high, as they say. On the other hand, it's a confusing mess, as it doesn't give you any sense of where the equity may be heading. Hey, going by charts alone is never advisable, as technical interpretation will never be a perfect science (some might argue it isn't science at all).

CVS Caremark (CVS) has received notice from Walgreen (WAG) that the latter would not participate as a provider in any new prescription drug plans awarded to CVS's pharmacy benefit manager after June 7.

Walgreen feels that it's no longer "in the best interests of its customers, pharmacists and shareholders to grow its future business" with CVS. Any current CVS plans in which Walgreen is already a service provider will not be impacted.

All three of the major indexes finished Tuesday in the red, but there were several big names that moved up to new 52-week highs in Tuesday's trading.

Walgreen Co. (NYSE: WAG): The drugstore giant had a really good day on Wall Street after posting better than expected earnings in the morning before the market opened. The company posted earnings of 44 cents per share versus analyst estimates of 39 cents. The stock set a new 52-week high of $38.44 and closed the day up 9.2% at $37.35.

Target Corp. (NYSE: TGT) wants to up the game a bit in the second half of 2009 as it seeks to increase its marketing and hopefully prop up sales. One area of focus for its marketing efforts for the remainder of 2009 will be on Target's in-store pharmacies.

Target will increase marketing as a percentage of sales for the last four months of 2009, sating that "For the year, our marketing plan is right on, but we've saved some money here in the front half for the express purpose of being able to invest it in the back half."

Walgreen (NYSE: WAG), a drugstore business that competes with CVS Caremark (NYSE: CVS) and Rite-Aid (NYSE: RAD), will be issuing results for the third quarter on Monday, June 22. According to Earnings.com, the analyst community is prescribing $0.56 per share for the company.

Of course, the question is: will Walgreen honor that prescription and fill it? I'd say it's quite possible. Last time around, Walgreen beat estimates. The call was for $0.66 per share in Q2. If you look at the press release from that time, you'll see that, once you adjust for some items, Walgreen went beyond expectations.

Walgreen (NYSE: WAG ) knows that people want all kinds of options to meet their healthcare needs. Walgreen also knows that it needs to grow and keep up with competitor CVS Caremark (NYSE: CVS) and the pharmacy department at Wal-Mart (NYSE: WMT). And, yes, I suppose Rite-Aid (NYSE: RAD) is technically a competitor, too, although you wouldn't know it by that drugstore chain's stock price. Well, according to The Wall Street Journal, Walgreen plans to promote an initiative called "Complete Care and Well-Being" to employers. The goal here is to give corporate, as well as government, employees and their families access to healthcare services such as preventive medicine and dental examinations in off-hour time periods. Walgreen will use a network of in-store clinics and health centers to provide these services. That's pretty cool, right? Well, one of the bigger benefits to Walgreen is the synergy it can promote by leveraging this program.

I love going to the drugstore. Whether it's CVS (NYSE: CVS) or my neighborhood Walgreen (NYSE: WAG), I love the convenience of being able to buy everything I need and everything I don't need in one place. I buy lots of Entenmann's donuts, toothpaste, and school supplies at my local store. And now, I may be able to get a flu shot at the store as well.

The New York Times ran an article today entitled "Should Pharmacists Give Flu Shots?" It seems New York City has been suffering from increasingly bad flu seasons. To combat such breakouts, the city is now attempting to pass a bill allowing pharmacists to give flu and pneumonia shots.

The same article quoted the Department of Health as saying that influenza is "now widespread in New York City, with more than 1,000 flu-related visits to emergency rooms each day. Some 20 percent of the current flu vaccine supply is unused."

I feel my local drugstore is competent to sell me nail clippers and gum, but do we really want these stores dispensing medical services?

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Even when the economy struggles, people still need medicine, diapers, personal-care products, and large boxes of candy. This explains the continued sales growth at Walgreen Co. (NYSE: WAG), which saw same-store sales in February jump 8.3%. Strong Valentine's Day sales and a particularly violent flu season helped boost demand at the pharmaceutical retailer.

Excluding the extra shopping day due to Leap Year, same-store sales were up 4.2%. Same-store sales in the chain's pharmacies rose 8.3% and climbed 4.1% excluding February 29. Sales from the pharmacy were modestly impacted by the transition of popular allergy medicine Zyrtec to an over-the-counter version. In turn, the appearance of Zyrtec on the regular shelves positively impacted general-merchandise (or front-end) sales, which rose 8.2% in February, or 4.6% excluding the extra shopping day.

The impact of these sales on the bottom line will be more apparent late this month; WAG is currently scheduled to report its quarterly earnings results on March 24. According to First Call estimates, Wall Street is expecting per-share results of 67 cents, or two pennies better than year-ago figures.

In late-morning trading, WAG shares have risen 0.8%. The shares have shown recent strength, tacking on nearly 13% since their late-January nadir.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

CVS Caremark (NYSE: CVS) is no longer looking for new acquisitions, but rather will focus on assimilating recent acquisitions, Chairman and Chief Executive Thomas Ryan said on Wednesday. While speaking to the Reuters Health Summit in New York (check out the blog for the conference here), Ryan said, "It's most important that we stay focused on the integration, the execution and getting our balance sheet in order, and then we will have the opportunity to look at opportunistic acquisitions."

CVS acquired giant pharmacy benefits manager Caremark in March and continues to integrate recent drugstore chain purchases.

It sounds like the company has its hands full given the amount of M&A work CVS has done over the past couple of years combined with the organic growth the firm is seeing. While fierce competitor, Walgreen (NYSE: WAG), is considering applying the brakes in terms of opening up new doors, CVS is in full-throttle mode right now.

Continuing with our defensive stock series.... With the markets in a choppy /consolidation mode (or perhaps worse), the drug store chain sector has appeal as a defensive strategy, and CVS Caremark (NYSE: CVS) is a superior performer in the aforementioned sector.

CVS has used acquisition (1,100 Eckerd drugs stores acquired in 2004, 700 Albertson's drugs stores acquired in 2006) and a super-rigorous, systematic store opening plan to create the drug store world's equivalent of a lien, mean, fighting machine: more than 6,200 stores in 43 states.

CVS has the resources, economies of scale, and, arguably, most importantly, the store site selection experience to continue to drive impressive revenue/EPS gains. Further, recent improvements in inventory processes and cost management support the above, and the acquisition of Caremark should add new clients/customers. True, back-store (pharmacy) margins may be pressured by generic competitors, but the front-store (everything else) should make up for it in 2007-2009. CVS's shares closed Tuesday up 39 cents to $40.11.

Continuing with our defensive stock series, with the markets in a choppy/consolidation mode (or perhaps worse), the drug store chain sector has appeal as a defensive strategy. Typically, Walgreen (NYSE: WAG) would fit the bill, but recent results have generated caution signals, and a Don't Buy, pending additional performance statistics.

On Oct. 1, Walgreen reported Q4 EPS of 40 cents, down from 41 cents Q4 a year ago, and 7 cents below the consensus estimate. Wall Street did not respond favorably, taking shares down more than 16% to about $40 from $48 that day. The shares have since deteriorated further, and closed around $38.25 Tuesday.

Prior to this quarter, Walgreen had recorded double-digit earnings growth in six of the last seven quarters, and many analysts had seen F2008 revenue advancing about 10%, including a 5% front store revenue gain. Nevertheless, those projections could not prevent the stock from incurring a large hit -- a sell-off symptomatic of today's market. Miss an EPS consensus estimate in a normal market, and the stock drops 5%. Miss an EPS consensus estimate in the current skittish market, and the Street takes your stock down 10%, or more. Did Wall Street's response constitute an overreaction? Probably.

That last point was reinforced on Monday when Morgan Stanley analyst Mark Wiltamuth raised his rating on the drug store chain to "Overweight," or "Buy," from "Equal-Weight," with a $45 target, arguing the notion that generics will cut deeply into 6,000-store WAG's margins has been overplayed.

[Note: Technical analysis agnostics stop reading here; all others continue.]

Still, technically Walgreen's stock is struggling with near three-year support levels around $38. If WAG fails to hold that support, a drop to the next major support level, $30, is possible. Further, the stock is now substantially below both the 50-day and the 200-day moving averages -- two indicators of stock strength/weakness.

Stock Analysis: Walgreen is a moderate-risk stock not suitable for low-risk investors. Further, the prudent strategy with WAG is Don't Buy, and wait to see if the stock can both hold the $38 support level, and close back above $43 in the quarter ahead. We'll re-evaluate WAG at that time.