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Rite Aid ‘performance deteriorating’, buy reiterated for merger: Credit Suisse

March 19, 2017

Weakness in Rite-Aid (NYSE: RAD) could be related to a cautious Credit Suisse note, noting deteriorating performance. While cutting estimates, the firm maintained its Outperform rating price target of $6.50 amid the pending Walgreen’s deal. Shares of RAD are down 4% mid-day.

Robert Willoughby commented (highlights from StreetInsider), “RAD’s latest proxy filing on March 3 revealed five year revenue, EBITDA, EPS, and other goals that were well below plan. While we have never known forecasts published for the sake of merger disclosure to be too reliable, we rarely see a company putting forth a more pessimistic view. Certainly, RAD’s deteriorating performance in recent quarters underscores a need for more caution. For FY17, we are moving our adj. EPS estimate to ($0.03) from $0.08. For FY18, we are moving to ($0.03) from $0.12. Our TP, however, remains $6.50, consistent with WBA’s revised deal terms.”


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