Merrill Lynch downgraded Rite Aid (RAD

) to sell from neutral.

Analyst Mark Husson says the recent rally in Rite Aid's share price severely limits upside even if sales and earnings do better than expected. He says at current forecasts, he sees only downside in the price as this recovery story is nearly played out, and it cannot afford yet to grow.

Trading at about 30.1 times the fiscal 2005 (Feb.) earnings per share estimate, and 8.2 times the enterprise-value-to-EBITDA, Husson says the stock is more expensive than rival drugstore CVS. He thinks CVS is a stable, investment grade business that can afford to, and indeed is, growing as well as just "recovering."