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

By:
on Apr 7, 2022
  • Deutsche Bank downgrades Rite Aid to "sell" with a price target of $1.0 a share.
  • Analyst George Hill says RAD might fail to continue as an operating company.
  • Shares of Rite Aid Corp have tanked more than 55% since the start of the year.

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 has $1.0 a share price target

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

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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:

At a number below $400 million, the equity arguably has no value as the company is not in a position to generate real returns to shareholders. COVID has hastened the decline of the retail pharmacy segment, and this preliminary 2023 outlook seems unattainable.

Rite Aid Corp is reporting next week

Rite Aid is scheduled to report its Q4 results and guide for fiscal 2023 on April 14th. 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.

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