Rite Aid Earnings Overtake Deal Hopes
NEW YORK (TheStreet) -- Rite Aid(RAD) , the debt-laden drug store giant that reported a $500 million-plus annual loss is a "Buy" even if the company can't attract a buyer like Walgreen(WAG) , according to a Guggenheim Partners analysis that cuts against speculation of a possible merger.
On Thursday, Guggenheim Partners analyst John Heinbockel raised his price target on the Camp Mill, Pa-based drug store giant to $2.25 a share from $1.60 on a boost in expected earnings at the company's stores. That earnings-based price target lift comes as the company's shares have surged nearly 60% in 2012 driven, by M&A rumors.
"Our optimism stems entirely from fundamentals and not from potential M&A. In our view, a strategic transaction is highly unlikely," notes Heinbockel in a March 15 research note. "This largely reflects the absence of logical buyers at acceptable prices. We find it difficult to make the case that
In November, Susquehanna Financial Group analyst Joseph Stauff wrote in a note to clients that the company could be a target of Walgreen, the largest U.S. drugstore chain. With Rite Aid, Walgreen would further bolster its near 30% market share, distancing it from CVS Caremark(CVS) , the industry second.