Struggling Rite Aid Stock Lower Before Earnings

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. 

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.