No, not this Rad:
They prefer RAD, the common stock of RiteAid, up big as their analyst says RiteAid's per-location valuation is too much of a discount to yesterday's price paid by Walgreens for Duane Reade.
Specifically, UBS notes that the Duane Reade deal amounted to an Enterprise Value of $4.2million per store. They also note that Long's Drug stores were valued at $5.6million each in their 2008 buyout. Contrast that with RiteAid's implied valuation of $1.6million per store, and they think the discount is far too much. I think they make a terrific argument, based on sales per store being only 22% below Duane Reade's numbers.
So, UBS isn't saying RAD is in great shape - far from it -they simply think there's upside for the shares because they trade at too much of a discount to other drugstore buyout prices.
I looked at RAD's recent ability to cover their debt payments. Still razor thin, but showing improvement:
A recent presentation by RiteAid's management can be found here. Pretty good analysis of their operating improvements, and their attempts to get some breathing room in terms of debt maturities.
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