Market Overview

Mizuho: Time To Buy Rite Aid

Share:
Mizuho: Time To Buy Rite Aid
Related RAD
Greenlight's Q4 Letter Reveals Another Tough Quarter For David Einhorn
Rite Aid Soars Too High Too Fast: Is This Justified?
Invest In Walgreens Or CVS, Speculate In Rite Aid (Seeking Alpha)
Related ESRX
What's Coming Up On PreMarket Prep Today
Wall Street Reacts To Spark Therapeutics' $850K Genetic Blindness Treatment
By The Numbers: Hunting For Undervalued Stocks (Seeking Alpha)

In a report published Wednesday, Mizuho analysts initiated coverage of Rite Aid Corporation (NYSE: RAD) with a Buy rating and price target of $10.

"We believe successful turnaround and capital restructuring efforts have set the stage for future growth through store refresh efforts, the expansion of healthcare services offerings, the refinancing of high-cost debt, and M&A," the analysts said.

The analysts believe that the potential share price catalysts include operating margin expansion, market share gains, potential future M&A and sustained optimization of the company's capital structure.

The company's efforts to achieve a turnaround have led to earnings growth, driven by rationalization of its underperforming stores, remodeling of stores, cost control and balance sheet improvement. "We think RAD is in the fifth inning of a successful operational and financial turnaround strategy," the Mizuho report stated.

In addition, the company has expanded its healthcare services with the acquisition of three healthcare services companies in the last 18 months. The analyst expect these acquisition to "drive store traffic, build customer stickiness and better position the company to the changing healthcare landscape."

The analysts also believe that Rite Aid is an attractive M&A candidate, with Express Scripts Holding Company (NASDAQ: ESRX) being a likely bidder. "Given lackluster retention rates, we think ESRX needs to make strategic moves to better position the company competitively to regain lost market share," the analysts added.

Latest Ratings for RAD

DateFirmActionFromTo
Jan 2018Evercore ISI GroupInitiates Coverage OnUnderperform
Dec 2017Deutsche BankInitiates Coverage OnHold
Sep 2017Loop CapitalMaintainsHold

View More Analyst Ratings for RAD
View the Latest Analyst Ratings

Posted-In: Mizuho SecuritiesAnalyst Color Long Ideas Initiation Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (ESRX + RAD)

View Comments and Join the Discussion!