Rite Aid stock slumps 18% for the week as weak outlook, diminished vaccine tailwind drive JPMorgan downgrade

Rite Aid Corp. stock sank 5.7% in Friday trading after the stock was downgraded to underweight from neutral at JPMorgan. Analysts slashed their price target to $12 from $21. Shares have tumbled 18.3% for the week. JPMorgan cited near-term hurdles, weak guidance and diminished COVID vaccine tailwinds for the downgrade. Rite Aid reported a fiscal first-quarter revenue miss on Thursday and gave guidance that fell below the FactSet consensus. "Management noted that the most profitable part of its business is under extreme duress, with acute scripts still down 12% on a two-year basis and a 30% year-over-year decline in the OTC cough/cold/flu category," JPMorgan said. "This continues to present a challenge, especially given the high fixed cost nature of the business. The company noted that it believes acute scripts and cough/cold/flu activity will ultimately come back, but does not have clear line of sight to timing at this point." Analysts note the long road ahead to a business turnaround, and Rite Aid executives talked up new owned brands and flagship stores, along plans to improve its digital capabilities on the call. Rite Aid stock is up 4% for the year to date while the S&P 500 index has gained 14% for the period.

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