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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: bruwin who wrote (63137)	1/10/2020 6:00:00 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78748

The Pharmacy sector has competitive issues. The fee per prescription has been trending down for a while but pharmacies could make it up in volume, but that doesn’t seem to be the case any more. The health insurers /pharma benefit managers a pushing down the fees for pharmacies, pushing down margins. Front end sales are not encouraging either. CVS decided that they run an integrated model with a health insurer (Aetna, which they purchased) and pharma benefit management and they seem to be getting good results. What really turned me against keeping WBA was that when CVS bought Aetna, they were able to switch the prescriptions of Aetna customers from Walgreen to CVS without much ado. Both WBA and CVS mentioned this in their CC. I decided after thinking about this that the pharmacies don’t have a “confidence” moat any more and we are dealing with a commodity retail business. I switched some holdings over to CVS, which has done better. I have no plan of getting back into WBA for the time being, but keep track of how the company is doing. Right now, I consider it a value trap.