On Wednesday, KeyBanc has upgraded GoodRx Holdings Inc. (NASDAQ: GDRX) stock to Overweight from Sector Weight and set a price target of $9.00. The firm's decision is driven by a positive shift in the company's performance metrics, including app downloads and monthly active users (MAUs), along with the potential for increased subscriber numbers through its GoodRx Gold service.
The upgrade comes as KeyBanc observes encouraging signs in GoodRx's user engagement, with a noted uptick in downloads and MAUs. This increase in user activity is seen as a positive indicator for the company's growth trajectory. Additionally, GoodRx has shown a slight acceleration in its GoodRx Gold subscription customers, with an approximate 2% increase from February to March, according to data gathered from KeyBank cardholders.
The analyst from KeyBanc highlighted the company's high growth and high margin characteristics, which are currently trading at a discount compared to peers and historical averages. This valuation gap is seen as an opportunity for investors, given the company's recent positive data trends.
Furthermore, GoodRx is expected to benefit from incremental Independent Service Provider (ISP) opportunities, with millions of eligible members poised to contribute to the company's expansion. The recent partnership with Publix, which is rolling out GoodRx Gold memberships across more than 1,200 locations, is anticipated to bolster the subscription base even further.
The price target of $9.00 reflects KeyBanc's confidence in GoodRx's potential for growth and market position. GoodRx Holdings Inc. is recognized for providing a platform that offers price comparisons for prescription drugs and discounts through its mobile app and website.
InvestingPro Insights
As GoodRx Holdings Inc. (NASDAQ: GDRX) receives an optimistic outlook from KeyBanc, real-time data and insights from InvestingPro further illuminate the company's financial health and market performance. A standout metric is GoodRx's impressive gross profit margin, which, as of the last twelve months ending in Q4 2023, sits at a high 91.68%. This is indicative of the company's strong ability to manage its cost of goods sold and underscores the high-margin characteristics highlighted by KeyBanc.
InvestingPro Tips reveal that management's aggressive share buyback strategy and the expectation of net income growth this year are additional positive signs for investors. With 7 analysts revising their earnings upwards for the upcoming period, there's a consensus that GoodRx's financial outlook is improving. Despite not being profitable over the last twelve months, analysts predict that the company will turn a profit this year, aligning with KeyBanc's positive assessment.
For those considering an investment in GoodRx, the company's market cap stands at $2.53 billion, and while it trades at a high EBIT valuation multiple, the potential for growth may justify the premium. The recent price uptick over the last six months of 29.06% also reflects growing investor confidence. To explore more about GoodRx and for additional insights, investors can visit InvestingPro at https://www.investing.com/pro/GDRX and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 13 additional InvestingPro Tips available, investors can gain a comprehensive understanding of the company's prospects.
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