That's what Rite Aid Corporation (NYSE: RAD ) CFO Darren Karst called a graph showing the pharmacy retailer's earnings turnaround over the last few years. Actually, Karst told the audience at the JP Morgan Healthcare Conference on Wednesday the term originally came from CEO John Standley. If you look at the chart, Standley and Karst have a point.
Their presentation at the conference didn't just talk about the past, though. Both Standley and Karst provided solid reasons to believe that Rite Aid's remarkable comeback will continue chugging along. Here are five factors that could prove them right (quotes courtesy of S&P Capital IQ).
1. Americans are getting older and older
The U.S. Census Bureau projects a 60% increase in the number of Americans age 65 and older between the years 2000 and 2020.
That's music to the ears of Rite Aid's management team. Why? Take a look at the comparison of how different age groups fill prescriptions.
More older Americans. More prescriptions filled. As John Standley said this week, "Very solid tailwind there."
2. Generic boom ahead
The last two years saw a huge slump in terms of sales dollars of branded drugs newly exposed to generic competition. Rite Aid, however, is encouraged by IMS Health's outlook for the next few years.
2015 should be the best year for new generics since 2012. From 2015 through 2018, a total of $78 billion is expected to be exposed to generic competition. While Standley noted that there are "a few question marks in terms of how a couple of drugs may play out," this is definitely good news for Rite Aid, which makes higher profits off of generic drug sale.
FY 2016 proforma = $356,000
FY 2015 plan = $393,000
FY 2014 = $424,591
FY 2013 = $515,421
- RediClinic has 30 walk-in clinics located in HEB stores in San Antonio, Houston and Austin
- Acquisition provides Rite Aid with a platform to offer convenient clinic services to its customers
- Rite Aid plans to add 35 clinics to Rite Aid stores by the end of Fiscal 2015 in select markets
FY 2014 = $249.4 millions.
FY 2013 = $118.1 millions
(from pdf presentation today).
As of late, it has definitely been a great time to be an investor in Rite Aid Corporation (RAD). The stock has moved higher by 39.1% in the past month, while it is also above its 20 Day SMA too. This combination of strong price performance and favorable technical, could suggest that the stock may be on the right path.
We certainly think that this might be the case, particularly if you consider RAD’s recent earnings estimate revision activity. On Jan 2, the company reported 1.7% gain in December’s same store sales. From this look, the company’s future is quite favorable; as RAD has earned itself a Zacks Rank #1 (Strong Buy), meaning that its recent run may continue for a bit longer, and that this isn’t the top for the in-focus company.
Moody's affirms Rite Aid's upsized revolver at Ba3
New York, January 14, 2015 -- Moody's Investors Service, ("Moody's") today affirmed the Ba3 rating of Rite Aid Corporation's asset-based revolving credit facility due January 2020, following its amendment and extension which including up to a $1.9 billion add-on. At the same time, Moody's affirmed all other existing ratings including Rite Aid's B2 Corporate Family Rating and SGL-2 Speculative Grade Liquidity rating. The rating outlook remains stable.
Rite Aid recently closed an amendment that increased the borrowing capacity of its asset-based revolving credit facility from $1.795 billion to $3.0 billion or $3.7 billion when the company repays its 8% senior notes. The amendment also extended the maturity date to January 2020 from February 2018. Rite Aid drew under the upsized revolver to fund the repayment of its $1.15 billion tranche 7 term loan. It may also draw under the revolver to repay the $650 million 8% senior secured notes at their first call date. Moody's views this transaction positively as it will reduce Rite Aid's annual interest expense by about $20 million to $50 million (after the repayment of its 8% senior secured notes) and extends Rite Aid's debt maturity profile. The rating outlook remains stable.
RAD will make sure the investment community know tomorrow at the JP Morgan Healthcare conference tomorrow. I feel they plan it for the maximum leverage.
RAD must time these two actions together for tomorrow.
Rite Aid Corporation (NYSE: RAD) is having a great month, returning almost 40 percent in the past month. The company recently revealed its same-store sales increased by 5.1 percent year-over-year in the month of December, comfortably beating analyst estimates.
If the latest 13F data still holds, several hedge funds and institutions could be very happy with this stock.
Gotham Asset Management
The fund managed by Joel Greenblatt must be quite pleased with Rite Aid’s recent performance, as it last disclosed (by the end of the third quarter of 2014) ownership of 12.78 million shares -- worth more than $60 million.
Gotham quadrupled its exposure to the company over the third quarter, when the stock traded below current prices. Unless it sold its stake over the fourth quarter, when the prices were close to 52-week lows, it should have perceived some upside.
Visium Asset Management
Jacob Gottlieb’s fund also seemed quite bullish on Rite Aid by the end of the third quarter, since it disclosed increasing its stake by 764 percent to 8.66 million shares. This position was worth almost $42 million by the time of the disclosure, but has now escalated to over $66 million.
Some analysts seem to believe this is not the end of the road for Rite Aid’s stock.
Credit Suisse recently issued an Outperform rating, accompanied by a $9 price target. JP Morgan also maintains an Overweight rating with a $9 target.
The stock is up nearly 1 percent during Thursday's trading.
The best way for you to judge HLF is getting your feet wet and join them. You will see the reality after attending their meetings and ask to cough up the money to buy their products for the "inventory". Ask yourself if you would buy such products as such prices and who would buy these products among your friends, co-workers, relatives, neighbors (don't forget how much time/money you would have to devote it too in order to get "customers/downline people).
That is great. I cannot sell RAD this year due to the IRS (taking big chunk). I will wait till 2015. If it gets to 8.50, I will unload some shares to cover the margin. The balance of the share can sit in the account for more bucks!