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RAD

Rite Aid

$2.76

-0.135 (-4.67%)

, WBA

Walgreens Boots Alliance

$78.37

1.28 (1.66%)

12:56
06/30/17
06/30
12:56
06/30/17
12:56

Rite Aid continues slide after Evercore reinstates Underperform rating

Shares of Rite Aid (RAD) fell in Friday trading, adding to Thursday's sharp losses after an analyst from Evercore ISI reinstated coverage on the stock with an Underperform rating. The news follows yesterday's announcements that the drugstore chain and Walgreens Boots Alliance (WBA) had terminated their prior merger agreement and that Walgreens will acquire 2,186 stores, related distribution assets, and inventory from Rite Aid for an all-cash purchase price of $5.175B. EVERCORE REINSTATES UNDERPERFORM: Evercore ISI analyst Ross Muken reinstated coverage on Rite Aid with an Underperform rating, versus its previous rating of In-Line, to reflect threats from online competition, structural challenges at the back-end of pharmacy given network positioning, and limited strategic options. The analyst said that while the asset sale to Walgreens aids in deleveraging and likely keeps liquidity concerns at bay for the time being, his firm still sees a challenging environment ahead for the company. Muken noted that Rite Aid's fundamentals "continue to deteriorate" and that he sees downside to the stock near-term to $2.00-$2.50 per share, or 8-9 times forward EBITDA. COWEN BACKS OUTPERFORM: On the other side, Cowen analyst Charles Ryhee said his firm is positive on the new Rite Aid pact with Walgreens, saying it better positions the company than if it had remained stand-alone with no deal at all. The analyst maintained an Outperform rating on the stock, saying that he sees several benefits from the transaction, including deleverage, lower generic procurement costs, greater leverage toward PBM, and increased financial flexibility. Ryhee noted, however, his disappointment that the merger with Walgreens was terminated, as he was hopeful that the deal would ultimately gain approval and close, but reiterated that he is positive about the new asset sale agreement. PRICE ACTION: In the early afternoon, shares of Rite Aid are down 4.67% to $2.76. OTHERS TO WATCH: Walgreens Boots Alliance (WBA) shares are down over 1% to $77.45 in midday trading, while Fred's (FRED), whose related asset purchase agreement with Rite Aid was also terminated Thursday, fell about 3.3% to $9.20.

RAD

Rite Aid

$2.76

-0.135 (-4.67%)

WBA

Walgreens Boots Alliance

$78.37

1.28 (1.66%)

FRED

Fred's

$9.51

-2.81 (-22.81%)

RAD Rite Aid
$2.76

-0.135 (-4.67%)

06/30/17
06/30/17
INITIATION

On The Fly: Top five analyst initiations
Catch up on today's top five analyst initiations with this list compiled by The Fly: 1. Rite Aid (RAD) reinstated with an Underperform at Evercore ISI. 2. Hill-Rom (HRC) initiated with a Buy at Needham and Neutral at Cantor. 3. Dermira (DERM) initiated with an Outperform at Evercore ISI. 4. Coach (COH) initiated with a Buy at Canaccord. 5. WWE (WWE) initiated with an Equal Weight at Morgan Stanley. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.
06/29/17
JEFF
06/29/17
NO CHANGE
Target $95
JEFF
Buy
Jefferies sees Walgreens topping new synergy target
Jefferies analyst Brian Tanquilut fully expects Walgreens Boots Alliance (WBA) to exceed its new synergy target from the purchase of Rite Aid (RAD) stores. He also expects the FTC to approve the new agreement as he thinks Walgreens wouldn't have entered into it if the agency wasn't fully aware and on-board with the revised transaction. The analyst views the recent pullback in Walgreens shares as overdone and keeps a Buy rating on the name with a $95 price target.
06/30/17
COWN
06/30/17
NO CHANGE
Target $5
COWN
Outperform
Rite Aid better positioned following new agreement, says Cowen
Cowen analyst Charles Ryhee said he is positive on the new Rite Aid (RAD) agreement with Walgreens (WBA) as it better positions the company than had it remained stand-alone with no deal at all. Benefits include deleveraging, lower generic procurement costs, increased financial flexibility and "great" leverage toward PBM, which is growing faster than retail. Ryhee reiterated his Outperform rating and $4.70 price target on Rite Aid shares.
06/30/17
EVER
06/30/17
INITIATION
EVER
Underperform
Rite Aid reinstated with an Underperform at Evercore ISI
Evercore ISI analyst Ross Muken reinstated Rite Aid with an Underperform rating, versus In-Line previously, to reflect threats from online competition, structural challenges at the back-end of pharmacy given network positioning, and limited strategic options. The analyst sees downside near-term to $2.00-$2.50 per share.
WBA Walgreens Boots Alliance
$78.37

1.28 (1.66%)

06/30/17
NEED
06/30/17
UPGRADE
NEED
Buy
Walgreens Boots Alliance upgraded to Buy from Hold at Needham
06/30/17
06/30/17
UPGRADE

On The Fly: Top five analyst upgrades
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Cabot Oil & Gas (COG) upgraded to Buy from Neutral at BofA/Merrill with analyst Doug Leggate saying Cabot 's gross Marcellus takeaway capacity will increase to 3.7 bcf/d from 2bcf/d by end of 2018 and positioned to increase free cash flow to $2B from $872M per year for 25 years. 2. Becton Dickinson (BDX) upgraded to Strong Buy from Outperform at Raymond James with analyst Lawrence Keusch saying he believes it should be a core holding based an an above average outlook for 5%-6% organic growth and mid-teens earnings increases with further potential upside. 3. Walgreens Boots Alliance (WBA) upgraded to Buy from Hold at Needham. 4. ManTech (MANT) upgraded to Buy from Hold at Loop Capital with analyst Joseph Vafi saying he sees "company-specific and secular catalysts" driving improving fundamentals and upward revisions to consensus estimates. 5. D.R. Horton (DHI) upgraded to Outperform from Market Perform at Raymond James with the firm saying it is uniquely positioned to capitalize on an unexpectedly tight and historically low existing home inventories, while new home demand remains broadly resilient despite rising prices. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
FRED Fred's
$9.51

-2.81 (-22.81%)

06/29/17
DBAB
06/29/17
NO CHANGE
Target $8
DBAB
Hold
Fred's price target lowered to $8 from $16 at Deutsche Bank
Deutsche Bank analyst Paul Trussell halved his price target for Fred's (FRED) to $8 after the company's asset purchase in connection with the failed Walgreens Boots Alliance (WBA), Rite Aid (RAD) merger was terminated. Fred's is now left to execute its pharmacy transformation organically, Trussell tells investors in a research note. He believes the company faces increasing competition in the dollar store space and keeps a Hold rating on the name.
06/06/17
WELS
06/06/17
NO CHANGE
WELS
Amazon may be the next threat to drug pricing, says Wells Fargo
After CNBC recently reported that Amazon (AMZN) is considering going into the prescription pharmacy business in the U.S., Wells Fargo surveyed nearly 2,900 U.S. adults and found that 54% of those polled said they would use or would probably use "Amazon Pharmacy." While the e-commerce giant has not confirmed its U.S. pharmacy interest, if it did enter the market analyst David Maris believes it could see fast adoption and "usher in a new age of price transparency." Maris also wonders if pharmacy "may be just the beginning" and if Amazon eyes the "even larger prize" of fully integrated digital healthcare. Publicly traded large-cap pharmaceuticals companies include AstraZeneca (AZN), Bristol-Myers (BMY), Eli Lilly (LLY), GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Merck (MRK), Novartis (NVS), Pfizer (PFE), Roche (RHHBY) and Sanofi (SNY). Publicly traded retail pharmacy operators include CVS Health (CVS), Walgreens (WBA), Fred's (FRED) and Rite Aid (RAD).
04/12/17
COWN
04/12/17
NO CHANGE
Target $90
COWN
Outperform
Cowen confidence fading on Walgreens/Rite Aid deal
Cowen analyst Charles Ryhee said although his confidence has faded a bit on whether the deal for Walgreens (WBA) to buy Rite Aid (RAD) will close, he still puts the probability at 60%. He feels if the FTC did not think the parties had a case they would have made that clear already. Rhee said his sources tell him there are continued reports the FTC is concerned about the viability of Fred's (FRED) to absorb the acquisition of Rite Aid stores. Ryhee maintained his Outperform rating and lowered his price target to $90 from $95 on Walgreens shares.
04/11/17
LEER
04/11/17
NO CHANGE
Target $90
LEER
Outperform
Leerink incrementally more cautious on Walgreens, Rite Aid deal
After reviewing the Rite Aid (RAD)/Fred's (FRED) remedy in more detail, Leerink analyst David Larsen says the odds of the Walgreens Boots Alliance (WBA)/Rite Aid deal going through are 50/50. The analyst notes that shares of the latter appear to be trading as if the deal will not go through. Larsen is incrementally more cautious on the deal, but believes that the odds of the transaction going through are "decent." He reiterates an Outperform rating and $90 price target on Walgreens' shares.

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