Lake Street Maintains Buy Rating on Rite Aid with Lower PT of $19

Lake Street Maintains Buy Rating on Rite Aid with Lower PT of $19

Lake Street Capital Markets has maintained its Buy rating on Rite Aid Corporation (RAD) despite recent market dynamics and financial performance. The investment firm has lowered its price target to $19, reflecting the ongoing challenges and uncertainties in the retail pharmacy sector. Lake Street's analysts cited Rite Aid's bankruptcy risk, tariff impacts on 2026, and Medicare policy shifts as key factors influencing their revised outlook.

McKesson Corporation, a major pharmaceutical distribution company, reported record revenues of $97.8 billion for Q1 Fiscal 2026, an increase of 23% over the prior year [1]. The growth was driven by a 9% increase in adjusted operating profit to $1.4 billion, with three segments delivering double-digit growth. However, McKesson's earnings call highlighted risks from Rite Aid's bankruptcy, tariff impacts on fiscal 2026, and Medicare policy shifts, which could affect revenue streams [1].

Rite Aid's bankruptcy risk is a significant concern for investors. The potential collapse of the pharmacy chain could disrupt the supply chain and impact McKesson's revenue. Additionally, tariff impacts on fiscal 2026 could increase costs and reduce profitability. Medicare policy shifts, such as changes in prescription drug coverage, could also affect Rite Aid's revenue streams.

Despite these challenges, Lake Street maintains a Buy rating on Rite Aid, acknowledging the potential for recovery and growth. The investment firm believes that Rite Aid has the opportunity to improve its financial performance through cost-cutting measures and strategic partnerships. However, investors should remain cautious and monitor the situation closely.

References:
[1] https://www.ainvest.com/news/mckesson-q1-2026-unraveling-contradictions-rite-aid-tariffs-market-dynamics-2508/