NEW YORK (TheStreet) -- Rite Aid Corp. (RAD) - Get Report stock is advancing 39.47% to $8.48 in afternoon trading on Tuesday following reports that Walgreens Boots Alliance (WBA) may acquire the drugstore chain, according to the Wall Street Journal.

Walgreens Boots Alliance stock is gaining 4.58% to $93.58 this afternoon.

The companies are in advance talks for a deal that could value Rite Aid at nearly $10 billion, sources told the Journal.

An acquisition would combine the second- and third-largest pharmacy chains in the U.S.

The announcement could come as soon as Wednesday, when Walgreens Boots Alliance is scheduled to announce its fiscal 2015 fourth quarter and full year financial results.

Walgreens Boots Alliance had 13,200 stores as of May 31, while Rite Aid had 4,561 locations as of August 29.

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 3.3%. 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 25.20%, 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