Rite Aid rises after hours
Rite Aid’s (RAD) better-than-expected results drove its stock by 1.5% in the post-trading session on June 27. Its share price had risen a moderate 0.5% by the day’s close before it released its quarterly earnings results. The stock is likely to get a boost from its strong results today.
Recent stock price movement
Rite Aid has stayed particularly strong in June. Its shares surged more than 25% by June 23. The stock’s momentum has generally been driven by optimism arising from the Albertsons merger announcement and the completion of its store sales to Walgreens.
However, the stock fell 7% on June 26 after the company issued a letter that asked shareholders to vote in favor of the pending merger with Albertsons. The Wall Street Journal reported in early April that a group of Rite Aid shareholders was planning to oppose the proposed merger, as it believed the deal was lopsided and undervalued Rite Aid.
How have competitors performed?
The stock returns of competitors Walgreens Boots Alliance (WBA) and CVS Health (CVS) have been quite unimpressive this year. WBA and CVS shares are down 8.8% and 3.4% YTD (year-to-date), respectively, underperforming the S&P 500 Index with its rise of 1% YTD.
However, both stocks have stayed strong in June. CVS has risen 11%, while WBA is up 6%. WBA soared 5% after the announcement that the company would be included in the Dow 30. CVS, on the other hand, benefited from the announcement of its launching a drug delivery service.
Wall Street recommendations on RAD
Rite Aid is covered by eight Wall Street analysts, who collectively rate the stock as a 3.0 on a scale of 1 (strong buy) to 5 (sell). Walgreens and CVS have better ratings of 2.3 and 2.0, respectively.
Six analysts (or 75%) have given “hold” recommendations on Rite Aid, while one analyst has suggested a “buy,” and one has suggested a “hold.” In comparison, there are no “sell” recommendations on either Walgreens or Rite Aid.
Cowen and Company reduced its price target on Rite Aid to $2.35 from $2.50 after the company’s earnings results. Rite Aid now has an average target price of $1.98, reflecting no upside from its current price.
Investors looking for exposure to Rite Aid through ETFs can consider the First Trust Consumer Staples AlphaDEX ETF (FXG), which invests 2.3% of its portfolio in the company.