The sell-off in telemedicine name GoodRx is overdone, and now could be a very good time to purchase the stock, in response to Citi. Analyst Daniel Grosslight initiated coverage on GoodRx with a buy rating, noting that the telemedicine company was created in response to a “complex and opaque” drug distribution channel for consumers that’s unlikely to develop into less complex any time soon. “In our view, GDRX will proceed to serve an important role in bringing transparency/consumerism to a historically unshopable market,” Grosslight wrote in a Wednesday note. GoodRx made its public debut on the Nasdaq in September 2020 , touting discounts on pharmaceuticals. Shares opened at $33 per share, and surged 53% of their first day of trading. Since then, shares have taken a beating, closing at just $4.36 on Wednesday. They’ve cratered nearly 87% this 12 months. Still, the analyst said the sell-off is overdone, given the corporate’s large total addressable market sized at $50 billion. Along with its give attention to generic retail pharmaceuticals, GoodRx has recently expanded into branded Rx spending as well. In actual fact, the analyst’s $7 price goal implies shares have greater than 60% upside from Wednesday’s closing price. To make certain, the corporate is coping with challenges resembling the fallout from a renegotiation with Kroger, slowing pharmaceutical spending and increasing competition. Regardless, the analyst said he doesn’t consider these are existential threats. “GDRX has the dimensions to administer these risks while pivoting into faster growing segments and developing unique solutions (e.g. the recently announced ESI partnership for business members),” Grosslight wrote. “In our view, the market has been too punitive, effectively pricing in no terminal value,” he added. —CNBC’s Michael Bloom contributed to this report.
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