Rite Aid Corporation
) escalated 2.2% on the recent news of an expansion of its
distribution agreement with
) for both brand and generic pharmaceuticals. Additionally, Rite
Aid hit a 52-week high of $6.55 yesterday, before eventually
closing at $6.41 and amassing a significantly high return over
the past one year.
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MCKESSON CORP (MCK): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
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As per the terms of the expanded agreement, McKesson will be
responsible for sourcing and distribution of generic
pharmaceuticals for Rite Aid as a part of its proprietary One
Stop Generics program. On the other hand, Rite Aid stores will
benefit from McKesson's daily direct-to-store delivery service
model for brand and generic pharmaceutical products.
Rite Aid is one of the leading national drugstore chains in the
U.S. while McKesson is a pioneer in pharmaceutical sourcing and
supply chain management. This agreement, spanning for five years
up to Mar 2019, will allow both the companies to leverage each
Furthermore, shares of this Zacks Rank #3 (Hold) company have
been gaining momentum since it posted positive 0.3% same-store
sales (comps) for the four weeks ended Jan 26, 2013. The rise was
an outcome of an increase in front-end comps, offset by a decline
in pharmacy comps. Shares have jumped nearly 13.1% since the
comps results released on Jan 30, 2014.
Rite Aid's comps came as a relief for investors following the
disappointing third-quarter fiscal 2014 results and an
unfavorable outlook released in Dec 2013.
Looking ahead, the company's sustained focus on expanding
pharmacy and clinical services through its Wellness+ customer
loyalty program and remodeling of wellness stores raise our
hopes. We believe that such measures will enable the company to
broaden its customer base and boost top- and bottom-line
Currently, Rite Aid trades at a forward P/E of 30.8x, a
64.1% premium to the peer group average of 18.77x. The last
traded price is 2.4% above the Zacks Consensus average analyst
price target of $6.26. Average volume of shares traded over the
last 3 months stands at approximately 26,504K. Moreover, the
company's long-term EPS growth rate is 17.5%, ahead of the peer
group average of 16.8%.
Other than Rite Aid,
Lexmark International Inc.
) also reached highs of $66.58 and $42.34, respectively, on Feb