GoodRx Holdings (GDRX) has received a new Buy rating, initiated by Leerink Partners analyst, Jim Kelly.
Jim Kelly has given his Buy rating due to a combination of factors related to GoodRx Holdings’ future growth and margin prospects. He perceives the company as capable of achieving a stable high-single digit growth rate, with the potential for EBITDA margins to approach 30% and an improvement in free cash flow. Despite past challenges, GoodRx remains the dominant player in the prescription discount space, which continues to provide significant savings for consumers. The current market valuation, according to Kelly, does not fully reflect GoodRx’s growth algorithm, instead placing undue emphasis on headline risks, whether they are substantiated or not.
In addition, Jim Kelly acknowledges GoodRx’s solid core business, which boasts high incremental margins thanks to its powerful data network. While acknowledging price pressures, he believes the company can still yield robust returns through its primary platform. GoodRx has also shown adaptability by forging direct relationships with Pharmacy Benefit Managers (PBMs) and expanding contracts with pharmacies, further solidifying its position in the marketplace. The resolution of its dispute with Kroger, which had previously hurt the company’s EBITDA, sets a clearer path forward for GoodRx’s financial health and is a key factor in Kelly’s optimistic outlook on the stock.
According to TipRanks, Kelly is an analyst with an average return of -18.6% and a 35.29% success rate. Kelly covers the Healthcare sector, focusing on stocks such as R1 RCM, Align Tech, and Cencora.
In another report released on February 26, Barclays also reiterated a Buy rating on the stock with a $8.00 price target.
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GoodRx Holdings (GDRX) Company Description:
GoodRx Holdings Inc provides digital healthcare platform that provides prescription drugs at affordable prices. The company offers services like diabetes testing, general visits, blood tests, HIV testing, Vitamin D screening, Pregnancy testing, and many more.
Read More on GDRX:
- GoodRx initiated with an Outperform at Leerink
- GoodRx Holdings Enhances Financial Stability and Restructures Leadership
- J&J lawsuit may spur adoption of GoodRx program, says Citi
- GoodRx price target raised to $6.50 from $6 at Goldman Sachs
- GoodRx to eliminate role currently held by Chief Operating Officer Raj Beri
