Category Archives: $RAD

Switching from $RAD (Rite Aid) to $AGN (Allergan) for trade…..

US Healthcare stocks have seen a volatile ride this year.The sector has been rife with takeovers, failed takeovers and the amazing fall Valeant Pharma from above $250 to below $100 in less than 3 months.

2CentView has a core position in Rite Aid, which following the take over bid buy Walgreen, is looking for another opportunity in the same sector.

Valeant Pharma looks cheap, but not a good idea to invest in something which is not understood, and their business and earnings model are under question.

Mylan stock looks cheap (FV=54) – it hit $74 in June after receiving a take over approach from Teva, while itself trying to takeover Perrigo!
Abbvie paid a hefty price for Pharmacyclics, after walking away from an inversion take over of Shire, following Treasury intervention.
Pfizer failed in it’s attempt to buy AstraZeneca.

Common to all these bids, is the need to invert to lower taxes – so when Pfizer was reported to have friendly talks with Allergan PLC – which has just completed the acquisition of Allergan INc, it could be Pfizer’s last chance for an inversion as Allergan is based in dublin. Maybe Allergan only bought Allergan to make the inversion trade with Pfizer possible – as it has to be a merger of near equals to make the inversion work.

Bottom line , all this means there is a possible trade on Allergan PLC. CNBC say the bid could be between 350 and 380, which is only 25x – Abbvie paid a much higher price for PharmaCyclics. This would create a Pharma giant on par with J&J.

2CentView FV on Allergan = 250 – but this does not factor the $40billion CASH sale of its generics business to Teva – which will make Allergan Debt free by the end of December. So FV could be $30 higher following this sale.

2CentView is that Pfizer will try and make this deal work. And Allergan will be receptive – at the right price. Assume $365 (mid of CNBC range).
So potential upside of $60 – 20%.

Trade: Buy Allergan ($AGN), target $365 – stop $275.

Talks are ‘friendly’ which means they could be ended at any time — but do not see Allergan trading below $280 if it does.

$RAD(Rite Aid) – Catches a $9 bid…

Walgreens bid seems to be buck lower than market was expecting yesterday – and the stock has traded down this morning.
There is some regulatory uncertainty – around 30% uncertain – as the stock was trading at 6 before the bid, worth $9 if the bid goes through, trading at 8.

So does not look like there will be a higher bid from CVS.

Look take profit unless you want to hold WBA Stock and sure the deal will go through.
There are some other great opportunities in the Health Care sector following sell off.

2CentView has a core position in $RAD from 2012 and looking to sell.

$RAD (Rite Aid) – announced a great quarter – take profit target hit …should you sell?

Last tweeted this on Sep 21, trade was to buy 5.40 sell at 6.75 with catalyst to drive the stock higher being the company could fix it’s reimbursement problems.

They have done that and reported a great quarter.

FV=$6.25 now so keep to the original take profit target of 6.75 for 25% gain in 3 months.

Long term $RAD could continue to go higher – 2CentView has a long term price objective of $20 over 3 years.

2CentView has a trading and core position in RiteAid and will take profit from the trading position to reduce the cost base on the core position to $1.70

$RAD (Rite Aid) from recent high of $8.35 to $5.35..should you buy or sell?

US retail drug store staged a dramatic recovery from being close to bankruptcy in 2011/12 with the stock trading at $1 to $8.35 in July 2014 as it fixed it’s balance sheet and revamped it’s stores.

At $8.35 it was way too expensive however – the 2CentView FV never rose above $6 and anything above $7 was a good time to sell.

Now, with 2 successive weak quarters where the company’s management keeps getting numbers on their pharmacy business completely wrong, and guided lower for 2015, the stock is down to $5.35.

FV = $5.4 – so the stock now trading in line with FV with weaker numbers priced in.

2CentView is the issue with the pharmacy business can be fixed – if necessary by firing the management – giving potential for $RAD stock to recover back to $6 over the next 6-12 months and $8 over the next 24 months.
Credit Default Swaps also went wider by about 30bp – so the credit markets think although the recent misses were not good – it is not terrible either.

Do not sell right now if you are long – if stock drops below $4.50 reassess.

If you are not involved and like $RAD as longer term recovery play, buy here at FV around $5.4, stop $4.70, take profit target $6.75.

2CentView has a core position in $RAD initiated in 2012.