Goodrx Holdings Intrinsic Value – GoodRx Holdings Stock Plummets 14% Following BofA Downgrade Due to Increased Risk Factors
January 4, 2024
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GOODRX ($NASDAQ:GDRX): GoodRx Holdings, Inc. is a leading healthcare company that offers prescription drug discounts and transparent pricing for prescription medications. It also provides digital coupons and online pharmacy services to make it easier for consumers to save money on their healthcare costs. On Tuesday, Bank of America downgraded the stock of GoodRx, causing its share price to plummet 14%. This downgrade was due to the increased risk factors associated with the company, including rising competition from other players in the market. The downgrade has raised concerns among investors, as it highlights the potential risks of investing in GoodRx Holdings. With the increasing competition, there is a risk of decreased market share and profitability for the company.
Additionally, there are concerns about the potential for new entrants into the market to disrupt GoodRx’s existing business model. Furthermore, the pricing environment for GoodRx’s services could become increasingly competitive, with companies offering cheaper solutions than what GoodRx currently offers. Overall, investors should take caution when investing in GoodRx Holdings, as the stock has taken a significant hit following Bank of America’s downgrade. It is important to consider all potential risks associated with such investments and to determine if they are worth the potential reward. Investors should also keep an eye out for further news from both GoodRx and other companies in the industry to assess their prospects in the future.
Analysis – Goodrx Holdings Intrinsic Value
At GoodWhale, we take a deep dive into GOODRX HOLDINGS‘s fundamentals to help our clients make informed decisions regarding investments. Our proprietary Valuation Line algorithm has determined a fair value for GOODRX HOLDINGS’s share of around $19.6. This means that the current stock price of $5.6 represents a significant potential opportunity to investors, as it is undervalued by 71.4%. This could be an attractive option for those looking to invest in a company with strong fundamentals and a promising outlook. More…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Goodrx Holdings. More…
| Total Revenues | Net Income | Net Margin |
| 737.73 | 15.03 | 2.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Goodrx Holdings. More…
| Operations | Investing | Financing |
| 154.3 | -41.61 | -46.58 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Goodrx Holdings. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.71k | 826.7 | 2.17 |
Key Ratios Snapshot
Some of the financial key ratios for Goodrx Holdings are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 13.1% | -76.8% | 2.5% |
| FCF Margin | ROE | ROA |
| 13.0% | 1.3% | 0.7% |
Peers
The company’s competitors include Walgreens Boots Alliance Inc, Rite Aid Corp, and CVS Health Corp.
– Walgreens Boots Alliance Inc ($NASDAQ:WBA)
Walgreens Boots Alliance Inc is a global pharmacy-led, health and wellbeing enterprise. The company has a market cap of 29.66B as of 2022 and a ROE of 10.64%. Walgreens Boots Alliance is the largest retail pharmacy chain in the United States with over 8,000 stores in all 50 states. The company also has a strong international presence with over 4,000 stores in 25 countries.
– Rite Aid Corp ($NYSE:RAD)
Rite Aid Corporation is a drugstore chain in the United States. The company’s market cap is $237.45 million as of 2022. The company’s return on equity is 240.91%. Rite Aid Corporation operates drugstores in 31 states and the District of Columbia. The company offers a variety of products and services, including prescriptions, over-the-counter medications, health and beauty aids, personal care items, food and beverages, greeting cards, and convenience items.
– CVS Health Corp ($NYSE:CVS)
The company’s market cap is 121.73B as of 2022. The company’s ROE is 10.96%. CVS Health Corp is a company that provides healthcare services. The company operates through three segments: Pharmacy Services, Retail/LTC, and Corporate. The Pharmacy Services segment provides pharmacy benefit management services, mail order pharmacy services, and specialty pharmacy services. The Retail/LTC segment operates retail pharmacies, long-term care pharmacies, and retail clinics. The Corporate segment provides management and administrative services.
Summary
On Tuesday, banking giant Bank of America downgraded GoodRx Holdings’ stock from “buy” to “neutral”, citing increased risk associated with the company’s business model. Shortly after, GoodRx’s stock plummeted by 14% in intra-day trading. Analysts suggest that GoodRx’s reliance on discount coupons for prescriptions and the potential for increased competition as a result of its expansion will be a risk going forward.
Despite this, GoodRx has still managed to increase its revenue and profits through the pandemic and continues to be a leader in online prescription drug savings. Investors will need to consider whether GoodRx can remain a dominant player in the space going forward.
