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On Thursday, BofA Securities made a move to adjust its outlook on GoodRx Holdings Inc. (NASDAQ: GDRX), reducing the price target from $4.75 to $4.00 while maintaining an Underperform rating. The stock, currently trading at $3.79 and near its 52-week low of $3.67, has fallen over 18% in the past week. According to InvestingPro analysis, the company appears undervalued based on its Fair Value model. The decision came after GoodRx reported its latest quarterly results, which, despite surpassing revenue and EBITDA expectations, revealed a troubling drop in monthly active consumers (MAC).
GoodRx’s MAC count for the quarter stood at 6.4 million, a decrease from the 6.6 million reported in the previous quarter and below the anticipated 6.64 million. This decline is particularly concerning as MAC numbers typically rise in the first quarter due to patients’ increased reliance on cash cards following the reset of deductibles. Despite these challenges, the company maintains impressive gross profit margins of 93.91% and has demonstrated strong cash flow generation. (InvestingPro subscribers have access to 12+ additional key insights about GDRX’s financial health.)
BofA Securities pointed to changes in the retail pharmacy sector as a potential cause for the lower MAC figures. These changes could be due to a combination of factors, including the closure of retail pharmacy stores and the introduction of cost-plus pharmacy reimbursement models effective January 1, 2025.
Although GoodRx had previously indicated on its fourth-quarter call that some weakening in MACs was expected due to the rationalization of pharmacy store footprints, the extent of the decline was larger than anticipated. The focus for the upcoming earnings call will be to understand the reasons behind the more conservative revenue outlook and what trajectory MACs might follow in the short term, especially as pharmacy store closures continue.
In light of these developments, BofA Securities has revised its CY25E EBITDA multiple for GoodRx from 6.5x to 5.5x, reflecting the reduced momentum in top-line growth. This revision underpins the new price target set ahead of GoodRx’s earnings call scheduled for tomorrow. Technical indicators from InvestingPro suggest the stock is currently in oversold territory, with analysts maintaining a consensus recommendation of 2.12, indicating a moderate buy. For deeper insights into GDRX’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, GoodRx Holdings, Inc. reported first-quarter revenue that surpassed analyst expectations, resulting in a notable increase in its stock. The company recorded Q1 revenue of $203.0 million, slightly above the consensus estimate of $202.59 million. Adjusted earnings per share were $0.09, aligning with analyst projections. GoodRx’s prescription transactions revenue, its largest segment, experienced a 2% year-over-year growth, reaching $148.9 million. Despite a 4% decrease in Monthly Active Consumers, the company attributed the revenue growth to improved unit economics. The company maintained its full-year revenue guidance for 2025 at $810-$840 million, consistent with the analyst consensus of $823.3 million. GoodRx also slightly raised its adjusted EBITDA outlook to $273-$287 million. CFO Chris McGinnis expressed confidence in achieving strategic initiatives that could help meet the upper half of their financial range. The company’s strong quarterly performance and maintained outlook contributed to a significant rise in its stock value.
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