UPDATE: Rite Aid Gains on Goldman Upgrade; Stock Has More Room to Run

On Wednesday, Goldman Sachs upgraded

from Neutral to Buy based on “stronger comp growth ahead, which should only be compounded by RAD's higher exposure to states that expanded Medicaid.” Robert Jones, analyst at Goldman Sachs, is also impressed by “store remodels and balance sheet deleveraging.” Jones's valuation is “in-line with [Rite Aid's] peers average on EV/EBITDA,” but believes the “value of [the company's] NOLs (PV of 1.6B on its balance sheet) should be factored in.” When treating the NOLs as cash, “RAD trades at 8.1x NTM EV/EBITDA, vs CVS/WAG 9.3/10.4x,” said the analyst. Shares of Rite Aid are up 5.4 percent to $6.79. The stock is already up 25.5 percent year-to-date.