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Where Did Rite Aid's Analyst Upgrade Come From?

By Mark Reeth and Michael Finarelli - Mar 14, 2014 at 5:07PM

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Rite Aid has had its share of struggles over the past few years, but Goldman Sachs just upgraded the stock to a buy and raised its price target. Is this stock stronger than it seems?

Earlier this week, Goldman Sachs upgraded Rite Aid ( RAD -1.70% ) stock from neutral to buy, and increased its price target to $8. While the company has had some major struggles over the past few years, suffering a total net loss of $1.4 billion between 2010 and 2012, this week's upgrade was largely based on the company cleaning up its balance sheet, closing unprofitable stores, and moving toward a turnaround. But while the company did report a profit of $118 million last year, with shares up nearly 300% for the year, the latest numbers from Rite Aid did not look very strong.

In this video, Motley Fool consumer goods analyst Mark Reeth takes a look at the bear case for the stock, but gives investors several factors to keep in mind that he thinks will offset the bearish view. He agrees with Goldman here: He sees the turnaround happening, and thinks Rite Aid is an easy under-the-radar buy today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Rite Aid Corporation Stock Quote
Rite Aid Corporation
RAD
$12.17 (-1.70%) $0.21

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