Categories Consumer, Markets, Retail

Rite Aid is looking for a prescription to avoid delisting

Shares of drugstore chain Rite Aid Corp. (RAD) which stood at $1 a month ago are struggling to return to that level, thanks to the downbeat investor sentiment. After falling to the multi-year lows, the stock has remained below the $1-mark for such a long time that it is currently facing the risk of being delisted from the New York Stock Exchange.

The management is currently mulling a reverse stock-split, among other options, after receiving a notice from the stock exchange asking it to raise the stock price in order to stay compliant with the listing norms. The share-price compliance rule stipulates that the average closing price of stocks should be least $1 for 30 consecutive days.

The compliance rule stipulates that the average closing price of stocks should be least $1 for 30 consecutive days

The downtrend, which began following a couple of botched merger deals and a management reshuffle, gathered pace last month after the company reported a net loss for the third quarter, triggering a stock selloff. Meanwhile, giving hope to the shareholders, the stock gained about 3% Friday to $0.77, improving slightly from the 9-year low. Now, what needs to be seen is whether the company will go for a merger of its outstanding shares to increase the per-share value. Over the past twelve months, the stock declined 62%.

Analysts’ consensus rating on Rite Aid is hold, with the majority of market watchers predicting that the stock will bounce back in the next 52 weeks. Painting a bleak picture of the company’s future performance, the management expects it to report a net loss for 2018 and the next fiscal year, hurt by continued softness in comparable sales growth.

Rite Aid posts better-than-expected Q3 earnings

The chances of a rebound will depend on the company’s ability to tackle the growing competition from online drug retailers like Amazon (AMZN). Meanwhile, triggering recovery hopes, latest reports revealed that there are signs of comparable sales growth and cash flow improving in the near term. Rite Aid’s pharmacy benefit manager EnvisionRx Options continues to be a bright spot. Experts believe that finding a suitable buyer for EnvisionRx might bring the company back on track.

Also Read:  Signet Jewelers Ltd (NYSE: SIG) Q4 2020 Earnings Call Transcript

 

We’re on Flipboard! Follow us to receive the latest stock market, earnings, and financial news at your fingertips

Most Popular

Why Bed Bath & Beyond (BBBY) should go the extra mile to regain lost ground

The market mayhem could not have come at a worse time for Bed Bath & Beyond Inc. (NASDAQ: BBBY). For long, the home furnishing retailer has been struggling, with a

Infographic: Key highlights from Walgreens Boots Alliance (WBA) Q3 2020 earnings report

Walgreens Boots Alliance (NASDAQ: WBA) reported third quarter 2020 earnings results today. Sales increased 0.1% year-over-year to $34.6 billion. Sales growth was 1.2% on a constant currency basis, led by

Levi Strauss (LEVI): Digital maintains momentum amid pandemic-induced store closures

Amid the COVID-19 pandemic, several retailers were forced to close their stores but in turn witnessed a pickup in their digital business. Levi Strauss & Co. (NYSE: LEVI) is the

Top