Loblaw Companies Ltd.’s stock has been downgraded after details on a long-awaited deal to reduce generic drug costs emerged.
Desjardins Group lowered its target price for the grocery-and-pharmacy retailer to $76 per share, from $84, and cut its recommendation to hold.
The change comes after the pan-Canadian Pharmaceutical Alliance, which represents the provinces, territories and federal governments, and the Canadian Generic Pharmaceutical Association reached an agreement that will see the prices of nearly 70 commonly prescribed generic drugs discounted by up to 90 per cent of their brand name equivalents.
Irene Nattel, an analyst with RBC Dominion Securities Inc., also dropped her target price from $87 to $84.
Loblaw shares dropped more than two per cent, falling $1.44 to $67.78 by late morning.
Loblaw did not immediately respond to a request for comment, but management has previously said it expects additional health-care reform to significantly impact its pharmacy business in 2018, and that the company has made significant progress to mitigate such headwinds.
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The Canadian Press