Rite Aid might fail to ‘continue as an operating company’

Rite Aid Corp (NYSE: RAD) is down 25% in the stock market on Thursday after a Deutsche Bank analyst said the drugstore chain might fail to continue as an “operating company”.

George Hill downgraded the stock this morning to “sell” with a price target of $1.0 a share – an 85% downside from here.

According to Deutsche Bank, Ride Aid needs its adjusted EBITDA for fiscal 2023 to fall in the range of $400 million to $450 million at least to continue as an operating company. The analyst wrote:

Rite Aid Corp is reporting next week

Rite Aid is scheduled to report its Q4 results and guide for fiscal 2023 on April 14^th. In December, the Pennsylvania-headquartered company had forecast its full-year adjusted EBITDA “significantly above” $430 million.

Hill, however, estimates a much lower $377 million in adjusted EBITDA for Rite Aid in fiscal 2023. Late last year, Rite Aid identified 63 stores across the United States that it said it will shut down to cut costs and improve profitability.

The stock is down more than 55% for the year.