On Friday, JPMorgan revised its stance on GoodRx Holdings Inc. (NASDAQ:GDRX), elevating the stock from a Neutral to an Overweight rating. Accompanying this upgrade was an increase in the price target from $7.00 to $10.00. The adjustment follows the company's earnings report for the fourth quarter of 2023.
The decision to upgrade GoodRx and raise the price target is rooted in the belief that the company is approaching a positive turning point. This outlook is based on GoodRx moving beyond recent challenges, such as the deprioritization of partnerships with Kroger (NYSE:KR) and vitaCare, and the anticipated growth from increased ISP adoption.
JPMorgan's analysis suggests that GoodRx's guidance for the year 2024 could not only signal a shift in momentum but may also be on the conservative side. This perspective is informed by the management's efforts to build a reputation for reliable guidance. As a result, JPMorgan has increased its estimates for the company, anticipating further revenue growth into 2025.
The firm has expressed a preference for companies actively engaged in the prescription drug supply chain within the healthcare services sector. GoodRx is seen as fitting this preference, with JPMorgan indicating that concerns about changes in pharmacy reimbursement models might be overblown.
The value proposition of GoodRx is underscored by the ongoing shift of pharmacy costs to consumers and the efforts of pharmacies and pharmacy benefit managers (PBMs) to secure prescriptions that might otherwise be lost. JPMorgan's outlook suggests confidence in GoodRx's potential to capitalize on these market dynamics.
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