Rite Aid Corp. (NYSE: RAD) is scheduled to report its fiscal third-quarter financial results before the markets open on Thursday. The consensus estimates from Thomson Reuters call for $0.06 in earnings per share (EPS) on $8.18 billion in revenue. The same period from the previous year had $0.10 in EPS on $6.69 billion in revenue.
This is one of the nation’s leading drugstore chains, with nearly 4,600 stores in 31 states and the District of Columbia. Many on Wall Street see the company very favorably positioned in health care, given its geographic overlap with Medicaid expansion, as well as its push into clinics.
Rite Aid is being acquired for $9.00 per share in a confirmed deal with Walgreens Boots Alliance Inc. (NASDAQ: WBA). In order to get to something fair, basic balance sheet and income data were considered, as were past rumors, what analysts think and even what some employees considered from Glassdoor.com data.
Some investors love what analysts have to say. Others, not so much. There is just one problem here with this buyout — Rite Aid isn’t fetching enough. That is the verdict of a standalone Rite Aid from the fundamental stock analysts. The notion that this is a 48% premium over before the rumors broke is one thing, but some analysts thought that Rite Aid was worth $10.00 per share.
A few analysts weighed in on Rite Aid prior to this earnings release:
- JPMorgan downgraded it to Neutral from Overweight and lowered the price target to $9 from $10.
- Goldman Sachs has a Neutral rating and a $9 price target.
- Credit Suisse also has a Neutral rating and a $9 price target.
As 2015 is coming to a close, Rite Aid has outperformed the market, with the stock up nearly 4%. Over the course of the past 52 weeks, the stock is up nearly 38%.
Shares of Rite Aid were trading up 1.2% at $7.90 Monday afternoon, with a consensus analyst price target of $9.15 and a 52-week trading range of $5.88 to $9.47.