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Rite Aid Price Target Slashed By JPMorgan

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By Sam Boughedda

Investing.com -- Rite Aid Corporation (NYSE:RAD) shares rebounded on Friday after tumbling 17% Thursday. The drugstore chain caught a downgrade from Deutsche Bank (DE:DBKGn) and a price target cut by JPMorgan (NYSE:JPM).

However, that did not impact the stock on Friday, with Rite Aid shares closing the session 7.44% higher.

JPMorgan analyst Lisa Gill slashed the price target on Rite-Aid shares to $7 from $14, maintaining an underweight rating.

Gill said to investors that while they continue to believe the retail pharmacy group is well-positioned over the long term, "the near-term backdrop remains challenged due to ongoing reimbursement pressure and less of an ability to offset those pressures."

Due to various industry headwinds, JPMorgan sees a long road ahead for Rite Aid as a stand-alone entity.

The analyst also pointed to significant near-term headwinds related to Covid-19, including lower acute scripts and weak OTC [over-the-counter] cough/cold/flu sales, driving a reduction in retail pharmacy profit in the near term.

"We believe a discount is warranted given the ongoing turnaround and high leverage at Rite Aid," wrote Gill.

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