Drugstore.com Inc.DSCM

Morningstar Rating

Stock Research and Analysis

by Larry Witt, CFA

Drugstore.com sells a wide variety of products and has tripled its sales since 2000. However, we believe competition and the lack of a competitive advantage will make it difficult for the company to generate solid returns for its shareholders.

Drugstore. Read more

Bulls Say

Increasing broadband penetration and fewer concerns about online security are driving more consumers to shop online.

Many trends--including an increase in the number of cash-paying consumers and the mandatory use by some employers and insurance companies--are driving the growth in mail-order prescription drug delivery to outpace the total prescription market.

The convenience of mail-order prescription drug delivery could become more prevalent as the baby-boomer generation ages.

Drugstore.com's flexible spending account store, which provides a convenient way for consumers to buy preapproved OTC products, could be a source of significant revenue growth as FSAs become more popular in the dynamic U.S. health-care market. Read more

Bears Say

Drugstore.com has yet to achieve profitability. The company had piled up a $770 million accumulated deficit through the end of 2008.

Most of the products sold by Drugstore.com can be found at any neighborhood drugstore or supermarket, mitigating the convenience of shopping online.

Drugstore.com sells mostly low-ticket items. Therefore, any cost savings will be lost on shipping charges.

Drugstore.com decided not to participate in Medicare Part D. Therefore, the company will not be able to benefit from the millions of baby boomers who will be switching to Medicare over the next few decades. Read more

Strategy

Drugstore.com aims to give customers a superior shopping experience relative to its brick-and-mortar brethren through convenience, low prices, interactive shopping tools, and a wider selection of products. Read more

Management

Dawn Lepore joined Drugstore.com in October 2004 as chairman and CEO, roles we believe should be split. Before joining the company, Lepore spent 21 years at Charles Schwab SCHW, most recently as vice chairman. In 2008, Lepore was paid a modest salary Read more

Profile

Drugstore.com is an online retail store and information site for health, beauty, wellness, and pharmacy products. It offers prescription drugs, over-the-counter medications, Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Dollar General Stock May Lose a Few Cents
Watch more