Analyst hikes target for Rite Aid after 2Q report
Analyst raises price target for drugstore chain Rite Aid after 2nd quarter report
Rite Aid Corp. turned in a "surprisingly strong" second quarter report that thumped analyst expectations, according to a Credit Suisse analyst who raised his price target on the drugstore chain's stock.
Generic drugs, strong expense control and improved profitability in the front end of Rite Aid stores — the area outside the pharmacy — helped the company, analyst Edward J. Kelly said in a research note on Thursday's earnings report. He said that the company's earnings before interest, taxes, depreciation and amortization of $318 million came in well ahead of his estimate of $243 million and the consensus expectation of $238 million.
Overall, the Camp Hill, Pa., company earned $30 million, or 3 cents per share, in the three months that ended Aug. 31. That represented the company's fourth-straight quarterly profit. It lost $41.4 million, or 5 cents per share, in the same quarter a year ago.
Revenue climbed about 1 percent to $6.28 billion.
Analysts expected, on average, a loss of 5 cents per share on $6.25 billion in revenue, according to FactSet.
Rite Aid is the nation's third-largest drugstore chain with 4,604 stores. It trails only Walgreen Co. and CVS Caremark Corp. in terms of locations.
Kelly said he still has an "outperform" rating on the stock, but he raised his target price to $5 from $3.50.
Shares of Rite Aid soared more than 23 percent, or 87 cents, to close at $4.58 Thursday after the earnings report. The stock had reached $4.65 earlier in the session, its highest price since the end of 2007, according to FactSet.
