Credit Suisse Raises Price Target On Rite Aid

On Friday, Credit Suisse raised its price target on Rite Aid Corporation (NYSE: RAD) from $8 to $9 and maintained an Outperform rating following the company’s December sales results.

According to analyst Edward J. Kelly, “Rite Aid posted another period of solid sales in December, as the company beat expectations in both the front-end and pharmacy.

"Total comp growth of 5.3 percent exceeded our estimate of 4.1 percent and consensus of 4.5 percent. The front-end comp of 1.7 percent outpaced consensus of 1.2 percent and represents the strongest 2-year trend since last January," he added.

“Flu-related OTC helped and Wellness remodels are likely a tailwind whose impact could ramp over time as a higher proportion of the store base is remodeled. The pharmacy comp beat as well, as sales rose 7.3 percent vs. consensus of 6.3 percent, although generic impact markedly decelerated sequentially due to the lapping of Cymbalta. Script growth remained strong at 5.1 percent, also helped by flu-related scripts as well as Medicaid expansion,” according to Kelly.

The firm expected “better fiscal 2016 results as remodels drive better traffic, MCK benefits ramp, the generic wave picks up (especially with the eventual launch of Nexium), and overall industry script trends remain solid.”

Rite Aid Corporation recently traded at $7.59, up 0.93 percent.