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Where Is Walgreens' Competitive Advantage?

By Mark Reeth and Jason Moser - Mar 25, 2014 at 1:10PM

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Is there a compelling reason for consumers, or investors, to choose Walgreens over the competition?

Shares of Walgreen Company ( WBA 4.28% ) are up today after the company announced earnings, posting a reasonable but not spectacular quarter. Profitability fell slightly due to a slower cold and flu season, and the company also experienced some headwinds on its generic drug business, a segment that the company is heavily dependent on. 63% of the company's sales come from prescription drugs, and of those sales, the generic drugs are more profitable than their big-name counterparts.

More broadly though, Motley Fool analyst Jason Moser discusses in the video below that while he sees the prescription drug business as a stable one in the United States, he doesn't see any particular competitive advantage that Walgreens has, that would bring consumers there instead of to a competitor. He tends to think that consumers will go to the closest pharmacy available to fill prescriptions, rather than seeing Walgreens as a destination that stands out above the crowd.

While the company has made some efforts to differentiate itself, Jason hasn't found them to be extremely compelling. The prescription drug business may generate stable sales, but for him, there are just better investing opportunities available today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
WBA
$46.53 (4.28%) $1.91
CVS Health Corporation Stock Quote
CVS Health Corporation
CVS
$90.87 (0.98%) $0.88
Rite Aid Corporation Stock Quote
Rite Aid Corporation
RAD
$12.00 (0.17%) $0.02

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