Boston, MA 09/19/2014 (wallstreetpr) – Rite Aid Corporation (NYSE:RAD) is reeling into great trouble; stock price plummeted over the last couple of days – as much as by 19.80%!
Forecast Puts Investors Off
Investors restrained from their purchasing RAD shares, soon after the organization charted out a full fiscal year forecast wherein, it lowered its margins of profits despicably, twice over a period of 3 months. The subsequent lowering within a quarter portrays the lack of conviction in Rite Aid Corporation (NYSE:RAD)’s own intrigues. Hence, why would investors prefer to invest in the shares, especially if the money making business of the concerned firm is appalling, and downgrading!
The Cause Of Concern
Rite Aid Corporation (NYSE:RAD) is apprehensive that the No. #3 popular and business mongering drug store across the US shall face a slackened same-store sales; consequently, net profit margins are deemed to fall towards the fag end of FY 2014. This can attributed particularly due to significant manufacturing delays on drugs that lost exclusivity and drop in insurance reimbursement significantly!
The CEO’s Words
The CEO and Chairman, John Standley was frank and precise enough while sharing his take in a quarterly earnings conference that Rite Aid Corporation (NYSE:RAD) expects net pharmacy margins to drop wholly in the next part of the year’s estimates. The delay has happened due to delayed launch of a drug equivalent to AstraZeneca’s Nexium! Over the counter medicines, sales of personal and beverages and items accounted for nearly 70% of the gross sales!
It is well known that drugstores generate lower revenues but sales of generic drugs; however the net profits are always greater than that of typical branded medicines. Hence, the slackened rate of manufacture or launch of generic drugs accounted for probable lowering of profits by a stiff margin!
Analysts at Thomson Reuters projected that Rite Aid Corporation (NYSE:RAD) shall garner net profits of 34 cents for each share, thus acquiring a net revenue of approximately $26.30 billion! Though RAD earned 13 cents/share this quarter in comparison to a YoY estimate of 3 cents/quarter, the yearly forecast rebuffed investors.