UBS Maintains a 'Neutral' on Rite-Aid (RAD); Expect Accelerated EBITDA in Calendar ‘12

UBS maintains a 'Neutral' on Rite-Aid (NYSE: RAD) price target raised from $1.20 to $1.50.

Analyst says, "In anticipation of an uptick in RAD’s same-store sales in calendar ’12 related to the ongoing Walgreen (NYSE: WAG) / Express Scripts (Nasdaq: ESRX) fallout, we have now built a detailed monthly sales model for RAD through FY16, and have now baked in the potential upside we see for RAD this year related to the dispute. In particular, we raise our F2013 EBITDA estimate from $972 mil to $1,084 mil to account for the incremental script volume (roughly 700k Rx/mth) and front-end sales for RAD."

"We assume some erosion of the ESRX benefit in FY14, but despite some expected giveback, we still expect RAD to capture some operating leverage in FY14 and from health reform and customer loyalty initiatives such that FY14 EBITDA increases from $1,036 mil to $1,182 mil (+9% y-o-y)."

For an analyst ratings summary and ratings history on Rite-Aid click here. For more ratings news on Rite-Aid click here.

Shares of Rite-Aid closed at $1.40 yesterday.

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