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GoodRx Holdings Inc.
Shares of GoodRx Holdings Inc. dropped Monday, after the prescription-drug pricing app received a less-than-enthusiastic endorsement from more than half of the Wall Street analysts who initiated research coverage.
The stock GDRX, -4.14% sank 4.3% in midday trading. It has lost 11.2% since reaching a post-IPO closing high of $57.16 on Oct. 6.
Of the 13 analysts who have started coverage of GoodRx, according to FactSet, 7 analysts initiated with the equivalent of hold ratings while 6 analysts started the company at the equivalent of overweight.
The average price target is $57.75, or just 8.9% above Friday’s closing price of $53.02.
J.P. Morgan analyst Doug Anmuth said GoodRx is building the leading consumer-focused digital health care platform in the U.S., with a “rare combination” of scale, growth and profit.
“However, we believe significant share appreciation from current levels will require multiple quarters of strong execution and estimate increases as shares are approaching fair value, in our view,” Anmuth wrote in a note to clients.
He started GoodRx at neutral with a $59 stock price target.
J.P. Morgan was among the lead underwriters of GoodRx’s IPO.
The company went public on Sept. 23. The stock closed Friday 61% above its $33 initial public offering price, while the Renaissance IPO exchange-traded fund IPO, +1.09% had rallied 10.6% and the S&P 500 index SPX, -0.32% had gained a little over 5% over the same time.
Don’t miss: GoodRx stock jumps more than 50% after IPO raises over $1 billion.
BofA Securities’ Justin Post initiated the stock at neutral with a $58 price target.
Post said that he is constructive on GoodRx’s long-term fundamentals, given its established relationships with pharmacy benefit managers, leadership in its category, strong user growth trend and high-margin business model. However, new investments are expected to put pressure on margins, and with the stock up so much since the IPO, “we don’t expect significant multiple expansion from here,” Post wrote in a research note.
Meanwhile, SVB Leerink analyst Stephanie Davis started GoodRx at overweight with a $61 stock price target.
“We believe [GoodRx’s] core company ethos of delighting the consumer is not to be overlooked, as it spurs the brand loyalty and trust that is so often neglected in the health care ecosystem,” Davis wrote. “As a result, [GoodRx] enjoys a high level of consumer recognition (#1 most downloaded medical app) and loyalty (consumer net promoter score of 90), leaving the company well positioned to benefit from the ‘winner take most’ dynamic in consumer-facing tech.”
Davis is also bullish on the company’s “immediately addressable” market opportunity, which she pegs at $32 billion to $39 billion, and which leaves the company “ample room for growth.”
