Rite Aid Stock Has Upside of 24% in the Next 12 Months



Rite Aid crashes after 2Q17 results

Rite Aid’s stock crashed 11%, touching a four-year low after the company missed revenue expectations and reported weak sales comps on September 28. The company is now sitting on year-to-date (or YTD) losses of 76%. In comparison, America’s largest drugstore chain, CVS Health (CVS), has risen 3.1%, while Walgreens (WBA) has lost 6.7% YTD.

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Rite Aid’s stock has been very volatile after Walgreens acquisition bid

Rite Aid’s stock has seen several highs and lows since Walgreens announced its intention to acquire the company in October 2015. We can see the sensitivity of the stock by looking at the movement in the stock price compared to any news or speculation.

For instance, Rite Aid stock rose 43% on the day of the deal announcement on October 27, 2015. It went on to lose a whopping 26.5% on June 29, 2017, the day when the original deal was scrapped. The stock price plunged more than 12% after the final deal was announced on September 19. As a result of the high volatility in the stock price, the company is currently trading around 350% below its 52-week high price.

What to expect now

Rite Aid is currently trading at $1.96. Wall Street has predicted its stock price to touch $2.44 over the next one-year period, which indicates an upside of 24%. The individual target price for the company range is between $2 and $2.95.

Wall Street recommendations on RAD

The eight Wall Street analysts covering Rite Aid have collectively rated the stock a 2.9 on a scale where one is a “strong buy” and five is a “sell.” In comparison, Walgreens and CVS have better ratings of 2.0 and 2.2, respectively. Seven analysts have given Rite Aid a “hold,” while one analyst has suggested buying the stock. There are currently no sell recommendations.

Investors looking for exposure to Rite Aid through ETFs can choose to invest in the First Trust Consumer Staples AlphaDEX Fund (FXG), which invests 1.2% of its portfolio in the company.


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