© Reuters. GoodRx (GDRX) should overcome near-term headwinds – Citi
By Sam Boughedda
Goodrx Holdings Inc (NASDAQ:) 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:) 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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