2014

The Zacks Analyst Blog Highlights:Rite Aid, Walgreen, CVS Caremark, Wal-Mart Stores and inTEST

CHICAGO, May 6, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Rite Aid Corporation (NYSE: RAD), Walgreen Co. (NYSE: WAG), CVS Caremark Corp. (NYSE: CVS), Wal-Mart Stores Inc. (NYSE: WMT) and inTEST Corporation (Nasdaq: INTT).

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Here are highlights from Friday's Analyst Blog:

Rite Aid's April Comps Fall

Drugstore chain retailer, Rite Aid Corporation's (NYSE: RAD) same-store sales (comps) for the 4 weeks ended Apr 27, 2013 slid 4.0%. The fall was due to a decline in pharmacy as well as front-end comps.

Pharmacy comps for April fell 4.2% primarily due to a negative impact of approximately 454 basis points from generic drug introductions and a 0.2% drop in prescription counts. Further, an earlier shift in the timing of Easter caused a lapse of 3.5% at the company's front-end comps.

Rite Aid reported total drugstore sales of $1.902 billion for the month, with prescription sales accounting for 67.9% of drugstore sales and third-party prescription sales constituting 96.9% of pharmacy sales. The company's April drugstore sales fell 4.6% from the year-ago level of $1.993 billion.

For the 8-week period ended on Apr 27, Rite Aid's comps decreased 3.0% primarily due to a fall of 4.4% in Pharmacy comps, partially offset by an increase of 0.1% at front-end comps. In the said period, total drugstore sales decreased 3.5% to $3.841 billion from $3.982 billion in the comparable period of 2012.

Prescription sales comprised 67.7% of total drugstore sales, while prescription counts nudged up 0.1%. Additionally, third-party prescription sales constituted 97.0% of the pharmacy sales.

Rite Aid, which trails Walgreen Co. (NYSE: WAG) and CVS Caremark Corp. (NYSE: CVS) in terms of store count, has persistently witnessed a decreasing sales trend over several quarters due to the introduction of lower cost generic (non-brand) drugs. Generic drugs are less expensive but generate higher gross margins for the company. This is evident from the fact that in the fourth quarter of fiscal 2013, generic medications were the primary drivers of margin expansion. Going forward, this Zacks Rank #2 (Buy) stock is likely to focus on expanding its portfolio of generic medications as the demand for generic drugs is growing consistently.

However, Rite Aid's generic drug sales could be adversely affected by Wal-Mart Stores Inc.'s (NYSE: WMT) entrance into the retail generic drug market. Due to Wal-Mart's wide array of manufacturers in India, Israel, and the U.S., the mass merchant can offer generic drugs at a more discounted price compared with the average $10.00 generic drug co-pay.

For inTEST and Thermal, the Future's Here!

Over the last few years that I have covered inTEST Corporation (Nasdaq: INTT), it has been transforming itself through the strategic diversification of its Thermal products segment.

The idea of the transformation is that a diversification strategy outside of inTest's traditional semiconductor markets should help to mitigate the cyclicality tied to that industry and give the company several exciting new opportunities with multiple new customers.

As a result the company now addresses growth markets in both the semiconductor and non-semiconductor areas, which include automotive, consumer electronics, defense, aerospace, telecommunications, and most recently the nuclear market.

In Short, traditional semiconductor markets are quite volatile. inTEST has been building this business to ensure their earnings are not. It worked!

For proof of what has taken place, look no further than yesterday's first quarter earnings release. While industry conditions remain challenging as a result of a number of capital equipment suppliers and semiconductor companies delaying certain capital expenditures, inTEST maintained profitability, generated cash, and continues to carry no debt.

Solid Quarter

On May 1, 2013, inTEST Corporation, reported financial results for its fiscal 2013 first quarter, ended March 31, 2013.

Revenues during the first quarter 2013 were $8.973 million, at the top end of management's guidance. This compares to revenues of $8.270 million for the three months ended December 31, 2012 and revenues of $10.731 million during the first quarter ended March 31, 2012.

In addition to sequential consolidated revenue growth, revenues in each of inTest's operating segments grew sequentially as well.

19 percent of first quarter 2013 net revenues were derived from non-semiconductor test compared to 15 percent of fourth quarter 2012 net revenues being derived from non-semiconductor test. Sequentially, first quarter non-semiconductor test net revenues increased 31 percent.

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