GoodRx should overcome near-term headwinds

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GoodRx should overcome near-term headwinds - Citi

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GoodRx should overcome near-term headwinds - Citi

GDRX

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By Sam Boughedda

Goodrx Holdings Inc (NASDAQ:GDRX) shares jumped over 17% Thursday after Citi analysts initiated a Buy/High-Risk rating and $7 price target on the stock.

The analysts said demand for the company's services should overcome near-term headwinds. However, he also acknowledged that "in a rational healthcare market, GDRX would not exist."

"It feeds off the exhaust of a complex and opaque drug distribution channel which, in our view, disadvantages patients. That said, we do not see the irrationality/complexity/opacity of drug distribution abating any time soon," said the analysts. "In our view, GDRX will continue to serve a vital role in bringing transparency/consumerism to a historically unshopable market."

They added that the near-term headwinds the company faces are in its "core prescription transaction segment (namely the Kroger (NYSE:KR) renegotiation coupled with increased competitive intensity)."

However, the Citi analysts do not think these headwinds are existential threats and will "instead manifest in slowing revenue growth and moderating EBITDA margin."

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