Why Rite-Aid (RAD) Is Up Today

NEW YORK (TheStreet) -- Rite-Aid (RAD) is climbing higher on Tuesday after receiving an upgrade from Goldman Sachs.

By noon, shares had added 5.5% to $6.79.

Goldman upgraded the drugstore chain to "buy" from "neutral" and upped its price target to $8 from $5.

The investment firm said though the company has been rallying since the beginning of the year (it's up 34% since January), there is more upside potential as comparable-store sales improve due to an expansion of the Medicaid program.

"Despite the 80% move in the stock (vs. S&P 11%) since September 2013, we still see upside in the company's turnaround. Two key elements to the story are store remodels and balance sheet deleveraging, and the expanded agreement with MCK should allow for the acceleration of one or both," added Goldman analyst Robert Jones in the note.

Must Read: Warren Buffett's 10 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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 revenue growth, compelling growth in net income and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow."

If you liked this article you might like

Healthcare and Tax Reform Crowd the Final Week of September

Walgreens Is Primed to Rally, With or Without Rite Aid

S&P 500 and Dow Score Records With Wall Street Upbeat Ahead of Fed

S&P 500 and Dow on Track for Records With Markets in Good Mood Ahead of Fed

Walgreens to Tweak Number of Rite Aid Stores It Buys to Win Regulatory Approval