S&P 500 eases slightly from fresh record high after stronger economic growth
On Wednesday, KeyBanc Capital Markets maintained its Overweight rating on GoodRx Holdings Inc. (NASDAQ:GDRX), currently trading at $4.30, with a steady price target of $6.00. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics. The firm’s analyst, Scott Schoenhaus, provided insights into the company’s current position within the challenging retail pharmacy industry. Schoenhaus highlighted GoodRx’s strategic moves to navigate these difficulties, including the company’s direct contracting strategy and its response to recent events such as the RiteAid bankruptcy.
GoodRx’s management team, supported by an overall GOOD Financial Health Score from InvestingPro, is actively working on various initiatives to stabilize and grow revenue. The company maintains impressive gross margins of 93.8%, while focusing on new opportunities within the pharmacy ecosystem that involve manufacturers, retailers, pharmacy benefit managers (PBMs), and consumers. Although the re-acceleration of Monthly Active Consumers (MACs) may be delayed until next year, the company is expected to benefit from direct contracting with retailers, which could improve margins.
Schoenhaus emphasized the potential for GoodRx to increase revenue per MAC through these direct contracting relationships. Additionally, the company’s Pharma Manufacturing business is set to contribute to high-margin revenue through cash programs, co-pay assistance, and brand expansions, with an estimated growth of around 20% for this year in that segment.
The analyst expressed confidence in CEO Wendy Barnes and her team’s ability to execute a profitable growth strategy that could lead to increased estimates for 2025. Schoenhaus noted GoodRx’s strong margins and free cash flow generation, with InvestingPro data showing a robust 9% free cash flow yield. The company’s commitment to shareholder value is evident through its aggressive share buyback program, including the recent repurchase of approximately $101 million of its stock in the first quarter. For deeper insights into GoodRx’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
KeyBanc’s reiteration of the Overweight rating and $6 price target reflects a modest valuation of approximately 3 times the firm’s forecasted fiscal year 2026 revenue and 8.5 times the adjusted EBITDA for the same period.
In other recent news, GoodRx Holdings Inc. reported its Q1 2025 earnings, meeting EPS expectations with $0.09 per share and slightly exceeding revenue forecasts with $202.97 million, surpassing the anticipated $202.59 million. The company also saw an 11% year-over-year increase in adjusted EBITDA, reaching $69.8 million. GoodRx repurchased $100 million in stock, aiming to enhance shareholder value. For the full year, the company projects revenue growth between 2-6%, with expectations of adjusted EBITDA growth by 5-10%. Analysts from Truist Securities and JPMorgan have been monitoring the company’s strategic initiatives and their potential impact on future growth. Additionally, GoodRx is actively addressing the implications of Rite Aid (NYSE:US90274J5618=UBSS)’s bankruptcy, which is estimated to impact less than 5% of projected revenue. The company continues to focus on strengthening partnerships with pharmacies and pharmaceutical manufacturers to enhance its market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.