TD Cowen has maintained a positive outlook on GoodRx Holdings Inc. (NASDAQ: GDRX), reiterating a Buy rating and a $16.00 price target for the company's stock.
Following the release of GoodRx's second-quarter financial results for 2024, the firm updated its estimates, taking into account the management's revised guidance. The company's management raised its EBITDA expectations to over $255 million for the year, while slightly lowering its revenue forecast to the lower end of the $800-$810 million range.
The adjustment in revenue guidance comes in the wake of anticipated impacts from the closure of Rite Aid (NYSE:US90274J5618=UBSS) (RAD) stores, which is expected to have a $5 million effect on GoodRx's financials. Despite this, TD Cowen remains confident in the company's performance.
The firm believes that the store closures of Walgreens Boots Alliance (NASDAQ:WBA) will have a different, less significant impact on GoodRx, estimating a smaller annual effect of approximately $4 million spread over three years.
GoodRx's business model, which provides a platform for prescription price comparison and discounts, has been under scrutiny as the pharmacy sector undergoes changes with store closures and consolidations. Nonetheless, the firm's reiteration of the $16 price target reflects continued confidence in GoodRx's ability to navigate the evolving market landscape.
GoodRx reported a steady growth in Q2 2024 with revenue increased by 6% year-over-year to $200.6 million, and adjusted EBITDA rose by 22% to $65.4 million. Despite the closure of Rite Aid stores affecting user engagement, the company successfully redirected customers to other pharmacies, continuing to expand its services and partnerships.
For Q3, GoodRx expects revenue between $193 million and $197 million, and full-year revenue at the lower end of the $800 million to $810 million range. The company also anticipates an 18% increase in adjusted EBITDA for the full year to over $255 million.
InvestingPro Insights
GoodRx Holdings Inc. (NASDAQ: GDRX) has demonstrated noteworthy financial metrics that could be of interest to investors following TD Cowen's optimistic outlook. According to real-time data from InvestingPro, GoodRx boasts a high gross profit margin of 93.07% for the last twelve months as of Q2 2024, underscoring the company's ability to maintain profitability despite industry headwinds. Additionally, InvestingPro Tips highlight that management has been actively buying back shares, signaling confidence in the company's value. Moreover, the company is expected to become profitable this year, providing a positive signal for future growth.
InvestingPro data also reveals a market capitalization of $2.57 billion, further establishing GoodRx as a substantial player in the pharmacy sector. Despite a recent price dip, with a 1-week total return of -12.61%, the company's stock is still trading at 75.81% of its 52-week high, indicating potential room for recovery. With 12 additional InvestingPro Tips available, investors have access to a comprehensive analysis that can inform their investment decisions for GoodRx.
These insights, combined with the analyst's reiteration of a $16 price target, suggest that GoodRx's strategic maneuvers and robust financial health may continue to attract investor interest in the evolving pharmacy landscape.
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