RAD - Rite Aid price target doubled at Deutsche Bank on undervalued PBM business

Deutsche Bank doubled its price target on Rite Aid (NYSE:RAD) on Friday, arguing that the drug retailer’s Pharmacy Benefits Manager (PBM) unit, Elixir, could be valued more than it previously thought. The remarks follow an agreement announced by Centene (CNC) in May to divest two of its PBM-related businesses Magellan Rx and specialty pharmacy PANTHERx for nearly $2.8B in total proceeds from the two transactions. “This recent trade of PBM assets gave us the opportunity to reexamine whether there is an opportunity to potentially unlock value through the sale of the PBM,” the analyst George Hill wrote. He notes that Centene (CNC) acquired PANTHERx for an undisclosed sum in Dec. 2020 and Magellan Rx in Jan. 2022 for $2.2B. While Elixir PBM could be valued more than previous expectations, “the market is telling us the retail business trades at a further depressed multiple,” Hill added, maintaining the Sell rating for Rite

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Rite Aid price target doubled at Deutsche Bank on undervalued PBM business