Stock Update: Rite Aid Corporation (NYSE:RAD)

After Rite Aid Corporation (NYSE:RAD) agreed to buy EnvisionRx from TPG for $2B and re-enter the pharmacy benefit management space it had previously exited, UBS said it believes investors will view the deal favorably given the EPS accretion potential and strategic benefits. The firm does not think the deal is going to set off a new wave of retail/PBM mergers, but does think it suggests a higher valuation for smaller PBMs such as Catamaran (CTRX).

There are 6 research firms in total that have issued ratings on Rite Aid Corporation (NYSE:RAD) within the past year. The consensus, or mean target price of the Wall Street analysts covering the firm is $7.875. The most recent revision to the consensus target was on 2015-02-04. Analysts are predicting that Rite Aid Corporation (NYSE:RAD) will report $0.07 earnings per share when they next issue their quarterly earnings release on or around 2015-04-09.

The consensus mean estimate is the calculated mean of all brokerage sell-side analysts that issue earnings estimates for the company. In the most recent quarter the company reported earnings of $0.1 that ended on 2014-11-30. Rite Aid Corporation (NYSE:RAD) has a 1.83 consensus analyst rating on the stock based on an arithmetical average of the 6 ratings given by the brokerage analysts covering the company. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell. The highest estimate of the 6 covering analysts sees the stock climbing to $9 within the next year while the lowest estimate places the 12-month target price at $6.

Looking ahead to full year estimates, analysts have placed the consensus earnings per share estimate for the current year at $0.4. The most bullish analyst sees the company reporting earnings per share of $0.45 while the most bearish analyst is predicting a current year EPS number of $0.34. Looking further ahead to the next three to five years, the long term EPS growth rate on a consensus basis is 13%, based on the 1 analysts providing longer term projections in their models.

Rite Aid Corporation is a retail drugstore chain in the United States. As of March 3, 2013, it operated 4,623 stores in 31 states across the country and in the District of Columbia. In the Company’s stores, it sells prescription drugs and a range of other merchandise, which it calls front end products. During the fiscal year ended March 3, 2013 (fiscal 2013), prescription drug sales accounted for 67.6% of its total sales. It carries a range of front end products, which accounted for 32.4% of its total sales in fiscal 2013. Front end products include over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, beverages, convenience foods, greeting cards, seasonal merchandise and other everyday and convenience products, as well as photo processing. It offers a variety of products under its private brands. Effective August 5, 2013, Rite Aid Corp acquired Kings Pharmacy East Inc, which owns and operates pharmacy.