Stocks & Investing
Stocks and Investing
Stocks and Investing
Wed, December 22, 2010
Tue, December 21, 2010 Rite Aid, Walgreen, CVS Caremark, Deckers Outdoor and Skechers USA
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Rite Aid Corp. (NYSE: [ RAD ]), Walgreen Co. (NYSE: [ WAG ]), CVS Caremark Corporation (NYSE: [ CVS ]), Deckers Outdoor Corporation (Nasdaq: [ DECK ]) and Skechers USA Inc. (NYSE: [ SKX ]).
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Here are highlights from Mondaya™s Analyst Blog:
Rite Aid's Loss Narrows
Leading drugstore chain operator Rite Aid Corp. (NYSE: [ RAD ]) posted a narrower net loss of $81.5 million in the third quarter of fiscal 2011, compared with a loss of $86.1 million in the year-ago period. The quarterly loss per share of 9 cents was an improvement over the Zacks Consensus Estimate for a loss of 13 cents.
Rite Aida™s revenues declined 2.4% year over year to $6.2 billion from $6.4 billion, primarily due to a 1.3% decline in same-store sales. During the quarter, the company opened 1 new store, relocated 11 stores, remodeled 15 stores and closed 17 stores.
Looking ahead, Rite Aid expects fiscal 2011 revenue to be in between $25.0 billion and $25.2 billion based on same-store sales decline of 1.5% to 0.9%. Net loss is now expected to be in the range of $525 million to $655 million (or 60 cents to 74 cents per share).
The company competes with, among others, retail drugstore chains, independently owned drugstores, supermarkets, mass merchandisers, discount stores, dollar stores, and mail order pharmacies. Competitive pressure in the industry is unlikely to subside with continued consolidation, new store openings, and increased mandatory mail orders. The companya™s main competitors are Walgreen Co. (NYSE: [ WAG ]) and CVS Caremark Corporation (NYSE: [ CVS ]).
Deckers to Outperform
We recently upgraded our recommendation on Deckers Outdoor Corporation (Nasdaq: [ DECK ]), one of the leading designers and producers of innovative footwear and accessories, to Outperform with a price target of $90.00. Earlier we had a Neutral rating on the stock.
Deckersa™ sustained focus on new product introductions and geographic expansion has helped robust growth. The companya™s top line has increased at a CAGR of 32% in the last five fiscal years.
Deckers recently delivered better-than-expected third-quarter 2010 results on the heels of strong demand for the product lines under the UGG and Teva brands, prompting management to lift its fiscal 2010 outlook.
The international markets provide a significant growth opportunity, and we remain optimistic about the company's incremental sales and earnings potential. Deckers international sales soared 48.2% in the third quarter. Internationally, the company distributes its products throughout Europe, Asia Pacific, Canada and Latin America.
Deckers, which faces stiff competition from Skechers USA Inc. (NYSE: [ SKX ]) also portrays a healthy balance sheet with a significant cash and cash equivalents balance of $250.5 million and shareholdersa™ equity of $562.3 million without any debt at the end of the third quarter, which provides ample liquidity for capitalizing on future growth opportunities.
Given the strong fundamentals, Deckers holds a Zacks #1 Rank, which translates into a short-term Strong Buy recommendation and correlates with our long-term view.
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