PreMarket Prep Stock Of The Day: What's Ailing Rite Aid?

It is a rarity when Wall Street analysts come out with a “sell” rating on a company. Yet in this market environment, when it occurs, it has a notable impact on the company being targeted.

That is certainly the case with Rite Aid Corporation RAD, which is the PreMarket Prep Stock Of The Day.

Serial Underperformer Since 2017: On a reverse split-adjusted basis, Rite Aid made its all-time in January 2017 at $175.40. At its current price of $6.20, that is a negative return of 96%. 

Over the same period of time, from the January 2017 high (2,301) for the S&P 500 cash index to its current price (4,459), the index yielded a return of 94%. That makes for a disparity of nearly 200%.

Not A Good Year For Rite Aid: After ending 2021 at $14.69, the issue was in the red by 43% at Wednesday’s closing price of $8.44. Of course, that has increased with the sharp decline in Thursday’s session.

So far in 2022, the S&P 500 index is in the red as well, by only 6.4%.

The Ax: Before the open, Deutsche Bank analyst George Hill downgraded the stock from Hold to Sell and lowered the price target from $16 to $1.

In his opinion, the company is in decline and may be running low on cash. The lingering effects of the pandemic may have had a lasting impact on retail pharmacies, the analyst said. 

PreMarket Prep's Take On Rite Aid: When the issue was being discussed on the show, it was trading at the $7 area. Co-host Dennis Dick agreed with the downgrade wholeheartedly.

“I thought this issue was a zero five years ago,” he said.

Obviously, I have been wrong as the stock rallied to $32 in January 2021, but I am sticking with my opinion.”

The author of this article noted the issue was $3 below its March 2020 low and there were no monthly support levels to be found. Also, if the premarket low ($6.60) is breached, there may be more follow through to the downside.

RAD Price Action: After a much lower open ($7 vs. $8.44), the issue had a brief rally to $7.14 and resumed its move lower.

Rite Aid stock ultimately lost 17.18% Thursday, closing at $6.99, according to Benzinga Pro. 

The discussion on the issue from Thursday’s show can be found here: