NEW YORK (TheStreet) -- Shares of Rite Aid Corp. (RAD) are down 8.58% to $6.07 in pre-market trade after the retail drugstore chain cut its full-year earnings forecast, saying lower reimbursement rates and increased use of generic drugs will hurt profit, according to Bloomberg.
Net income for fiscal 2015 is expected to be 22 cents to 33 cents a share, the company said. Rite Aid previously forecast 30 cents to 40 cents. Analysts had anticipated 34 cents, according to the average estimate compiled by Bloomberg.
Generic medicines and copycats of drugs that recently lost patent protection will hurt margins in the second half of the year, Rite Aid said. The company also reduced the top end of its full-year sales forecast, saying revenue was now expected to be $26 billion to $26.3 billion. Rite Aid in June had forecast revenue of as much as $26.5 billion.
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, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and poor profit margins."