CVS, Walgreens prove durable amid the rubble on Wall Street

Drug Store News,  Jan 15, 2001  

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The chain drug industry's top two operators sailed through last year's gut-wrenching stock market like world-class racing sloops, defying the market's downward slide with remarkable gains in share price. But for most other publicly traded drug retailers, it was a dismal year on Wall Street.

Walgreen Co. and CVS both posted big gains in Y2K, as investors fled the chaos of the technology stock crash in search of quality companies with proven track records and consistent earnings. Also riding high was Duane Reade, which ended the year with a gain of nearly 11 percent amid a brightening profit picture.

Other chains, however, fared far less well, and some, like Drug Emporium, Phar-Mor, Horizon and Rite Aid, rode a steep and harrowing descent as investors pummeled their stocks amid concerns about cash flow, earnings or weak sales. Also caught in the blood bath were the dot-com pharmacies, which fell victim to the Street's take-no-prisoners treatment of Internet firms last year.

How the numbers play out this year is anybody's guess. But one cautionary note came in early January from David Magee, a retail analyst with Robinson-Humphrey Co. Noted Magee on Jan. 3, "There is a valuation risk if investors elect to shift funds away from defensive names into more economically sensitive stocks over the next several months to 'play' expected interest rate cuts."

                  Chain drug stocks' performance for 2000
                                     Close
              Year high Year low Dec. 29, 2000 % change [*]
CVS            $60.44    $27.75     $59.94         50.3%
Walgreens       45.75     22.06      41.81         42.9
Duane Reade     32.94     20.56      30.56         10.9
Longs           26.00     15.94      24.13         -6.5
Horizon          7.44      0.75       1.00        -61.9
Phar-Mor         4.75      0.88       0.88        -68.2
Rite Aid        12.25      1.75       2.38        -78.8
Drug Emporium    6.38      0.22       0.47        -89.4
Source: The Wall Street Journal
(*.)The percentage change reflects
change from 1999 final closing price.

COPYRIGHT 2001 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2008 Gale, Cengage Learning