"SHARES of big American drugstore chains have generally risen sharply this year, at least partly because skittish investors have been seeking cover in the sector, traditionally viewed as safe during turbulent times for stocks.
Ms. Baker also said she thought that Walgreen’s stock could rise to $56 next year, or 27 times her 2007 earnings estimate of $2.05 a share. (Walgreen’s uses a different fiscal calendar, but Ms. Baker based her comparison of the two companies on the 2007 calendar year.) Shares of Walgreen now trade at $50.91, or 30 times earnings over the last 12 months.
The longer-term case for investing in the drugstore stocks depends largely on the notion that aging Americans will gradually be consuming more pharmaceutical products.
“If you’ve got a customer and they take 20 prescriptions this year, chances are they’ll take 21 next year,” said Mr. Heinbockel at Goldman Sachs. “It’s almost like an annuity business.”
So if there is going to be a new chain drugstore in Union Square (at the Jim Did It sign building) it would be great to see it have a design as good as possible (instead of as cheap as possible). The current proposal with a large parking lot at the corner of Hano and Cambridge Streets is one clear area for improvement.
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