Rite Aid's shares surged after the company reported excellent results and raised its guidance. As the turnaround appears to be back on track on now, shares are likely to continue to move higher.

Headquartered in Camp Hill, Pennsylvania, Rite Aid Corporation (RAD) is the third largest retail drugstore in the U.S., based on revenues. The company has about 4,600 stores across the country.
 
Excellent Results and Raised Guidance
Rite Aid reported its third quarter fiscal 2015 results on December 18. Revenues for the quarter increased 5.3% to $6.7 billion thanks mainly to 5.4% increase in same store sales from the previous year quarter.

Net income came in at $104.8 million or $0.10 per share, up from $71.5 million or $0.04 per share, a year ago and much ahead of the Zacks Consensus Estimate of $0.05 per share.

Based on third quarter results, the management raised their guidance for fiscal 2015. They now expect net income to be between $315 million and $370 million or between $0.31 and $0.37 per share. The management expects script growth to benefit from the Affordable Care Act, favorable demographics filed by acquisitions and growth in immunizations.
 
This guidance was significantly better than the previous guidance of $0.22 – $0.33 per share and the Zacks Consensus Estimate of $0.30 per share.
 
The partnership with McKesson for drug distribution and purchasing process now appears to be paying dividends as all stores were converted to this new distribution process by early in the third quarter.
 
Estimates Revisions
As a result of a strong quarterly report and updated guidance, analysts have started raising their estimates for RAD. Zacks Consensus Estimate for the current fiscal year now stands at $0.33 per share up from $0.28 per share, 7 days ago. The consensus estimate for the next fiscal year is currently unchanged at $0.37 per share but is likely to move higher as more analysts update their research reports and estimates.