Goldman Sachs Maintains Buy on Walgreen Company (WAG)

Goldman Sachs is out with its report today on Walgreen Company WAG, maintaining Buy. In a note to clients, Goldman Sachs writes, "Walgreen recently announced its intent to acquire drugstore.com, a leading Internet retailer of OTC pharmacy, vision products, and beauty care. The purchase price is $430 million. DSCM generated sales in its last fiscal year of $457 million, which we believe is five-to-six times the size of WAG's current online operation, operated at a low-single-digit EBITDA margin (including stock-based compensation), and generated a net loss. We see strategic merit in WAG increasing its online and OTC distribution footprint as competition ramps up from AMZN and other, more category focused players. Importantly, operating with another nameplate should enable WAG to protect its convenience-driven pricing umbrella without undermining the integrity of its brand message." Shares of WAG closed Friday at $39.64, down 0.78% from Thursday's close.