RBC Capital Markets issued an upgrade for GoodRx Holdings Inc
The analyst stated the Integrated Savings Program (ISP) and direct contracting (DC) initiatives, along with the expansion of its manufacturing solutions business, offered significant new growth opportunities and strengthened the stability of its core Rx transaction business.
"We think this 'hybrid' approach presents both some incremental revenue opportunity while also better insulating GDRX from PBM-retailer disruptions like what happened with Kroger in mid-2022," RBC wrote.
GoodRx announced a new direct contracting agreement with Kroger Co.
As a result of the agreement, patients will be able to present a GoodRx coupon at Kroger Pharmacies to receive more savings on the expected patient price for most generics, beginning on June 1.
With the initial selling and contracting largely completed - GoodRx has secured agreements with five pharmacy benefit managers (PBMs) and seven of the top 10 pharmacies, RBC writes the company has a clear path to achieving a mid-teens+ annual EBITDA growth rate over the next three years.
The analyst noted this plan would help adjust the current 10x '25 EBITDA valuation to better reflect its growth rate and align it with the 14x peer average.
RBC has raised the price target from $8 to $10 and upgraded the stock from Sector Perform to Outperform.
GDRX Price Action: GoodRX Holdings shares are up 2.92% at $7.41 at publication on Thursday.
