Rite Aid Corp

Rite Aid Corporation (NYSE: RAD) is a healthcare company that operates a retail drugstore chain. The Company is engaged in providing its services to customers and communities through various programs. It operates through two segments: the Retail Pharmacy segment and the Pharmacy Services segment.

Recent Financial and Business Updates:

• According to a recent class action complaint, Rite Aid is accused of disregarding evidence that its stores were distributing illegal prescriptions and deliberately erasing internal records containing concerns raised by vigilant pharmacists regarding suspicious prescribers.
• The alleged action of knowingly dispensing unlawful prescriptions for controlled substances could lead to Rite Aid being accused of violating the Controlled Substances Act. Furthermore, it is claimed that Rite Aid may have violated the False Claims Act by seeking reimbursement from federal healthcare programs while engaging in such practices.
• Rite Aid Corporation has released its fiscal 2024 first-quarter results, indicating a decrease in revenues from USD 6.0 billion to USD 5.7 billion compared to the previous year. Retail comparable same-store prescriptions increased by 4.7%, and excluding the impact of COVID, the increase was 7.4%.
• The net loss for the quarter was USD 306.7 million, a significant increase from the previous year's net loss of USD 110.2 million. This rise was mainly due to a goodwill impairment charge at Elixir. Adjusted EBITDA for the quarter was USD 91.7 million, down from USD 100.1 million in the prior year.
• Looking ahead, Rite Aid updated its fiscal 2024 outlook, projecting total revenues between USD 22.6 billion and USD 23.0 billion. The net loss for the fiscal year is expected to be between approximately USD 650 million and USD 680 million. Adjusted net loss per share is forecasted to range from USD 4.29 to USD 4.78. Capital expenditure for the year is estimated to be around USD 175 million, with a focus on investments in technology, prescription file purchases, and distribution center automation.

Technical Observation (on the daily chart)

Currently, the stock is near an important resistance range of USD 1.75-USD 2.00, from where price has taken resistances in the past. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction. The RSI (14 period) momentum indicator is at a value of 49.04 , correcting from the overbought zone, with expectations of some consolidation. Moreover, the price is currently positioned between both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support and resistance levels respectively.­­­

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to Rite Aid Corporation (NYSE: RAD) at the closing market price of USD 1.62 as of July 31, 2023.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 31, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.