Rite Aid (RAD) Stock Declines as Analysts Lower Rating
NEW YORK (TheStreet) -- Rite Aid Corp. (RAD) - Get Report shares are dropping 1.3% to $7.58 on Friday after JP Morgan earlier today downgraded the drugstore chain to "neutral" from "overweight" with a $9 price target.
Separately, the company yesterday announced that it will offer Harmonyx genetic testing kits at most of its stores. Customers can use these oral swab tests to determine the effectiveness of their prescription medication based on their genetic makeup.
"By offering Harmonyx genetic testing to our customers, we're helping to ensure that the medication they are taking is the most effective medication to help them treat and manage their condition while avoiding unnecessary and potentially harmful side effects," said Jocelyn Konrad, Rite Aid executive VP of pharmacy.
Specifically, these kits will be offered at all of its stores except those in New York State.
Separately, TheStreet Ratings team rates RITE AID CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate RITE AID CORP (RAD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to other companies in the Food & Staples Retailing industry and the overall market, RITE AID CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, RAD's share price has jumped by 50.86%, exceeding the performance of the broader market during that same time frame. Although RAD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The gross profit margin for RITE AID CORP is currently lower than what is desirable, coming in at 26.75%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.28% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$26.26 million or 121.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: RAD