Rite Aid Q2 Profit Misses Expectations, Shares Tumble

Exiting the quarter, Rite Aid is lowering its fiscal full year net income forecast to between $125 million and $195 million from its prior outlook for between $150 million and $230 million.

Most plausibly, it was the reeled-in revenue and same-store sales outlooks.

Shares of Rite Aid (NYSE:RAD) opened at 7.66 on Monday. Vetr raised Rite Aid from a “buy” rating to a “strong-buy” rating and set a $9.75 target price on the stock in a research report on Tuesday, July 7th.

The company’s same-store sales have also increased 2.10%, compared to that of last fiscal year. Rite Aid (NYSE:RAD) also lowered its full-year EPS guidance to 12-19 cents, below the consensus estimate for 21 cents, from 14-22 cents previously. Bank of America fixed their price target at $11.

Rite Aid reports its revenue soared in its fiscal 2016 second quarter, its first including results for recently acquired PBM EnvisionRx. Specifically, Rite Aid’s adjusted EBITDA as a percentage of revenue stood at 4.5%, a steep loss from the 5.6% it reported previous year . The firm’s revenue for the quarter was up 17.5% on a year-over-year basis. The firm has a 50-day moving average of $8.57 and a 200-day moving average of $8.41. In the last 50 and 100 days, Rite Aid is down 7.38% and down 5.32%, respectively. Additionally, the company expects to generate free cash flow of about $300-$400 million in fiscal 2016. The number of prescriptions filled at same stores rose 0.2%, and prescription sales accounted for 69.3% of total sales.

Rite Aid’s 2QFY16 earnings per share (EPS) were 2 cents, which missed the consensus estimate of 4 cents. They now have $9.60 target price on the stock. Retail drugstore sales are expected to be between $26.7 billion and $27.0 billion and same store sales to range from an increase of 1.5 percent to an increase of 2.5 percent over fiscal 2015.

Though it would take some digging, most investors – professional and amateur alike – will do the same math done above and sooner or later recognize the drugstore chain is doing reasonably well now that the EnvisionRx integration has been completed.

According to bloomber, 10 out 13 analysts covering the stock found it very lucrative, thus giving it a Buy recommendation, Two have given a Hold, and only one has given it a Sell. The Organization sells prescription drugs along with a range of other merchandise, which are called front-end products. It operates around 4,570 stores in 31 states across the country and in the District of Columbia. Its front end products contain over-the-counter drugs, beauty and health aids, personal care items, cosmetics, household items, food and drinks, greeting cards, seasonal merchandise and several other every day and convenience products. The Business provides a wide selection of products through its portfolio of private brands.

Rite Aid’s Chairman and CEO, John Stanley is really confident on the company’s future performance.