Goodrx Holdings Inc (NASDAQ: GDRX) closed roughly 50% higher on August 18th after Bagsvaerd-headquartered Novo Nordisk (NYSE: NVO) announced a GLP-1 partnership with the healthcare platform.
GoodRx is now offering all strengths of Ozempic, Wegovy and other products to self-paying eligible patients at $499/month.
Investors haven’t found the Goodrx share particularly interesting this year. It’s still down over 40% from its August 2024 52-week high despite the dramatic move made on Monday.
What is the benefit of Novo Nordisk’s deal for Goodrx?
The partnership with Novo Nordisk is a positive development for GDRX, as the platform could benefit from the continued growth in the diabetes and obesity drug markets.
The Danish company’s value proposition is expanded by offering its GLP-1 medications at a significantly reduced price for self-paying customers. This will attract an enormous, highly-demanded user base.
The NVO agreement is a simple way to increase revenue and confirms Goodrx’s power as a platform that manufacturers can use to reach their patients. This will boost investor confidence, and improve future prospects.
This deal, which could be a significant boost to the Goodrx share price in time due to an increase worldwide demand for diabetes and weight loss medications, may also unlock further gains.
BofA: NVO Agreement is not reason for buying GDRX Shares
Allen Lutz is an analyst at Bank of America. He says that the partnership with Novo Nordisk is certainly a positive catalyst for Goodrx, but this isn’t enough to justify investing in Goodrx.
The investment firm reiterated on Monday its “underperform rating” for GDRX shares, warning that pharmacy closures and changing reimbursement dynamics may reverse today’s gains in the coming weeks.
Lutz’s research note maintained his price target of $3.40 on Goodrx Holdings. This indicates a potential decline from current levels by approximately 30%.
Goodrx does not pay dividends at the moment, making it less attractive to income investors as a holding for the long term.
Why should you buy Goodrx Holdings Inc?
Goodrx remains a complicated investment, despite a Monday’s euphoric rise.
The NVO agreement is a positive step forward and confirms the role of GLP-1 in this ecosystem. However, there are still structural challenges that persist, which makes it prudent to buy GDRX at the current price.
The future of the platform depends on its ability to convert Monday’s breakthrough into a lasting performance, or whether this rally was just a momentary burst of optimism.
Wall Street firms are largely of the opinion that the first scenario will be the outcome in the end. According to The Wall Street Journal the current consensus rating for Goodrx Holdings is “overweight”, with price targets as high as $7, which indicates a potential upside of 35%.
Allen Lutz, then, is one of the most bearish analysts for GDRX. Wall Street does not necessarily share his cautious view on GDRX.
The post Is Novo Nordisk the catalyst that Goodrx needs? This post may change as new information unfolds
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