Struggling Rite Aid Stock Lower Before Earnings

Rite Aid stock has taken a 25% haircut in 2021

Deputy Editor
Dec 20, 2021 at 2:17 PM
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The shares of drugstore chain Rite Aid Corporation (NYSE:RAD) are down 2.2% to trade at $11.80 this afternoon, just ahead of the company's third-quarter earnings report -- due out before the open tomorrow. The stock is down nearly 37% year-over-year, more than 25% year-to-date, and facing pressure from every short- and long-term trendline on the charts. In other words, Rite Aid will need a miracle report to reinvigorate its shares and push them away from their annual lows. 

RAD Chart Dec 20

The bad news is Rite Aid stock tends to fair poorly in post-earnings sessions. Following its last eight reports, RAD has moved lower five times. In fact, all three of its next-day sessions in 2021 have been losses. Overall, the stock averaged a post-earnings move of 19.2% in the last eight quarters, regardless of direction, while the options pits are pricing in a much larger 24.4% move this time around.

Short sellers have been building their positions on Rite Aid stock in recent weeks. Short interest rose 7.2% in the most recent reporting period, and the 12.22 million shares sold short makes up a hefty 22.6% of the stock's available float. It would take seven days to cover these bearish bets, at the stock's average pace of daily trading.

While there are only a few eyes on RAD, all three analysts in coverage recommend a "hold" or worse. However, the 12-month consensus price target of $13 is a 10.2% premium to current levels, indicating a round of price-target cuts could be right around the corner.

 

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