Leerink Partners has affirmed their optimistic stance on GoodRx Holdings Inc. (NASDAQ: GDRX), maintaining both an Outperform rating and a $12.00 price target for the company's shares.
The endorsement follows recent investor meetings with GoodRx's management, where the company's Chief Financial Officer, Karsten Voermann, and Head of Investor Relations, Aubrey Reynolds, presented.
During the meetings, GoodRx's management team discussed the company's value proposition, growth drivers, market positioning, and approaches to managing margins and profits.
The discussions did not reveal any significant new information. However, they reinforced the company's strategic initiatives aimed at enhancing growth sustainability.
Leerink Partners expressed confidence in GoodRx's potential for continued growth, suggesting that the stock's current valuation does not fully reflect the company's prospects.
The firm pointed to what they perceive as an overemphasis by the market on the company's second-quarter revenue and EBITDA cadence, which they believe has led to the stock being undervalued.
The $12.00 price target set by Leerink Partners is based on approximately 15 times their estimated EBITDA for the calendar year 2025. This valuation reflects the firm's expectation of GoodRx's financial performance and growth trajectory in the coming years.
In other recent news, GoodRx Holdings Inc. has reported a steady increase in its second-quarter financial results for 2024, with a 6% year-over-year rise in revenue to $200.6 million. The adjusted EBITDA also rose by 22% to $65.4 million.
These developments come despite the closure of Rite Aid (NYSE:US90274J5618=UBSS) stores, which is predicted to have a $5 million effect on GoodRx's financials. TD Cowen, however, maintains a Buy rating and a $16.00 price target for the company's stock, demonstrating confidence in GoodRx's ability to navigate the market.
For the third quarter, GoodRx expects revenue between $193 million and $197 million, and a 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
To complement Leerink Partners' optimistic outlook on GoodRx Holdings Inc. (NASDAQ:GDRX), recent data from InvestingPro provides additional context for investors. The company's market capitalization stands at $2.63 billion, reflecting its significant presence in the healthcare technology sector. GoodRx's impressive gross profit margin of 93.07% for the last twelve months as of Q2 2024 underscores its efficient business model, aligning with one of the InvestingPro Tips highlighting "impressive gross profit margins."
Despite the positive gross margins, GoodRx faces challenges, as evidenced by its negative return on assets of -3.71% over the same period. However, an InvestingPro Tip suggests that "net income is expected to grow this year," which could potentially improve profitability metrics. This expectation aligns with Leerink Partners' view that the current stock valuation may not fully reflect the company's growth prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for GoodRx, providing a deeper understanding of the company's financial health and market position. These insights can be particularly valuable in light of the strategic initiatives discussed in the recent investor meetings.
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