UPDATE: Jefferies Initiates Coverage on Rite Aid on Turnaround in Progress, Approaching Headwinds

In a report published Tuesday, Jefferies analyst Mark Wiltamuth initiated coverage on Rite Aid Corporation (NYSE: RAD) with a Hold rating and $5.30 price target.

In the report, Jefferies noted, “Rite Aid has made progress in its turnaround, but we see declining EBITDA in the near-term as the company faces a fading generic drug wave, and some attrition from the Express Scripts customer wins from last year. Given Rite Aid's financial leverage, and its 30-40% lower store productivity vs. CVS and WAG, we believe the current EV/EBITDA discount vs. these peers is justified.”

Rite Aid Corporation closed on Monday at $5.20.