Since announcing its proposed merger with Albertsons, shares of Rite Aid (NYSE: RAD) continue to fall. The stock is now way off the $2.00 - $2.50 estimated post-merger value. Why is the stock still falling? The simple explanation is that the deal "stinks" because shareholders are not getting the maximum fair value.
Full Answer
Will Rite Aid stock fall to $1?
Rite Aid Stock Plummets. Why This Analyst Believes the Shares Could Fall to $1. Rite Aid stock was plummeting on Thursday after Deutsche Bank cut its price target for the stock to a new Street low ahead of the pharmacy retailer’s earnings report next week.
How did Rite Aid's earnings beat analysts'estimates?
However, Rite Aid's adjusted earnings of $0.38 per share easily beat the average analysts' estimate of $0.22 per share. Image source: Getty Images.
Why did Deutsche Bank downgrade Rite Aid?
The Deutsche Bank analyst believes Rite Aid will struggle to meet estimates, which is why the downgrade comes ahead of earnings. Furthermore, full-year 2023 EBITDA guidance will be important. If the number comes in below $400 million, Hill argues the company will no longer be in a position to generate meaningful returns for shareholders.
Why did Heyward Donigan Buy Rite Aid shares?
Rite Aid CEO Heyward Donigan bought shares of the drugstore chain the day after it reported a better-than-expected quarter. President and CEO of Rite Aid Corp (30-Year Financial, Insider Trades) Heyward R Donigan (insider trades) bought 14,350 shares of RAD on 12/22/2021 at an average price of $13.93 a share.
Investors don't like the company's first-quarter update
Keith began writing for the Fool in 2012 and focuses primarily on healthcare investing topics. His background includes serving in management and consulting for the healthcare technology, health insurance, medical device, and pharmacy benefits management industries. Follow @keithspeights
What happened
Shares of Rite Aid ( NYSE:RAD) were plunging 14.3% lower as of 11:22 a.m. EDT on Thursday. The steep decline came after the pharmacy retailer reported its fiscal 2022 first-quarter results before the market opened.
So what
As you might expect after today's sell-off of the healthcare stock, investors weren't happy with Rite Aid's first-quarter results. The company reported revenue of $6.16 billion, below the consensus estimate of $6.21 billion. However, Rite Aid's adjusted earnings of $0.38 per share easily beat the average analysts' estimate of $0.22 per share.
Now what
It's more important to focus on a company's long-term prospects than how it performs in a single quarter. Rite Aid CEO Heyward Donigan said she thinks the pharmacy retailer is on the right track going forward, saying, Rite Aid is in a position to benefit from "a healthier economy and the reopening of the communities we serve."
What happened
Shares of Rite Aid (NYSE: RAD) sank 36.2% in December, according to data from S&P Global Market Intelligence.
So what
Rite Aid's third-quarter revenue rose 1.8% year over year to reach roughly $5.4 billion, and same-store sales climbed 1.6% thanks to a 3.1% increase in prescription growth offsetting a 1.5% decrease in front-end sales.
Rite Aid to shutter two Sacramento locations as part of corporate closure plan
Two Sacramento Rite Aid locations are expected to close over the next few weeks, a company representative confirmed to the Business Journal.
Rite Aid Corporation -- Moody's announces completion of a periodic review of ratings of Rite Aid Corporation
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Rite Aid CorporationGlobal Credit Research - 04 Feb 2022New York, February 04, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Rite Aid Corporation and other ratings that are associated with the same analytical unit.
