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Bank Of America: What To Expect For Rite Aid Ahead Of FTC Merger Decision

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Bank Of America: What To Expect For Rite Aid Ahead Of FTC Merger Decision

Rite Aid Corporation (NYSE: RAD) stock has been all over the radar since its proposed merger with Walgreens Boots Alliance Inc (NASDAQ: WBA) was announced in October of 2015. Rite Aid’s stock has been at the mercy of media rumors about whether the Federal Trade Commission will allow the merger to go through or block it on antitrust grounds. This week, Rite Aid shares have soared 23 percent following media reports that the deal will likely be allowed to go through.

The FTC has reportedly scheduled a closed-door meeting to discuss the deal on Thursday. Walgreens has set a July 7 “certified compliance” deadline for the deal, suggesting investors will get some sort of resolution within the next couple of weeks.

News articles this week have cited anti-trust officials and former high-ranking Department of Justice officials indicating the deal will likely be approved. However, Bank of America analyst Steven Valiquette cautions traders from relying too heavily on media reports.

“Given the whipsaw occurring in broad news reports related to this proposed merger over the past 20 mths, we continue to view news articles as less dependable to predict [the] FTC vote,” Valiquette wrote on Tuesday (see Valiquette's track record).

Related Link: A Timeline Of The Walgreens Boots Alliance/Rite Aid Merger

As expected, Bank of America says traders should expect Rite Aid shares to continue to be volatile until an official decision is announced.

Despite this week’s big move, Rite Aid stock is still down more than 54 percent in 2017 as the company has delivered double-digit declines in year-over-year EBITDA. For now, Bank of America remains on the sidelines on Rite Aid until there’s more clarity o the situation.

At time of publication, shares of Rite Aid were up 4.69 percent at $3.90.
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Image Credit: By M.O. Stevens (Own work) [Public domain], via Wikimedia Commons

Latest Ratings for RAD

DateFirmActionFromTo
Sep 2019Deutsche BankInitiates Coverage OnSell
Sep 2018Goldman SachsReinstatesSell
Aug 2018Cowen & Co.DowngradesOutperformMarket Perform

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