Rite Aid (RAD) Gains as Cowen Sees Amazon Takeover as One Way to Enter U.S. Pharmacy Market
Get Alerts RAD Hot Sheet
Rating Summary:
5 Buy, 7 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 11
Join SI Premium – FREE
Rite Aid (NYSE: RAD) is higher Tuesday (+3.5%) as Amazon (NASDAQ: AMZN) takeover rumors resurface following a research reports from Cowen discussing Amazon's U.S. pharmacy opportunity. A takeover of Rite Aid was identified as one of several ways Amazon could potentially enter the US Pharmacy market, the firm concluded.
"If Amazon were to launch Pharmacy in Whole Foods, on Prime and Prime Now, an acquisition of Rite Aid would accelerate market share gains and other positive benefits," analysts John Blackledge and Charles Rhyee commented.
By acquiring Rite Aid, Amazon would receive state licenses in at least 19 states, located predominately in the Northeast and West Coast, which represent some of the more attractive markets in the US, given their high population densities, the analyst notes. Notably, the acquisition of Rite Aid would likely provide Amazon with a pharmacy license in California, which is known to be a difficult state to secure a license.
Under this scenario, they estimate Amazon US Retail and Mail Pharmacy business could generate ~$20BN in ’19, ~10% US Retail & Mail pharmacy market share (ex-Specialty), rising to $28BN by ’23 or ~12% market share.
They said the main downside to acquiring Rite is that Amazon would inherit over 2,500 underperforming stores relative to its larger drug retail peers, which would need to be addressed.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Home Depot (HD) PT Raised to $360 at Telsey, 'in the long term, Home Depot should remain a winner in retail'
- CFIUS Accepts Re-filed Notice for Proposed Sale of The Kinetic Group to CSG
- Tricon Residential (TCN) Shareholders Approve Proposed Take Private by Blackstone Real Estate
Create E-mail Alert Related Categories
Analyst Comments, Rumors, Trader TalkRelated Entities
Cowen & Co, Definitive AgreementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!