Analysts split on Amazon RxPass's impact on GoodRx Holdings

GoodRx Holdings, Inc. (NASDAQ: GDRX) shares are down for a second day in a row after Amazon announced Tuesday that it is rolling out a new product, RxPass, which provides the company's US Prime members with access to generic medications that treat more than 80 common health conditions for just $5 a month.

GoodRx is currently down more than 9%.

Reacting to the news, Citi analyst Daniel Grosslight, who has a Buy rating and $7 per share price target on GDRX, told investors that while it is still more economical to use GoodRx for consumers taking one drug, for the 30% of American's using two or more drugs, RxPass will be a "very compelling offering," particularly for consumers who are already Prime members.

"We also think this will pressure GoodRx Gold membership (which was just raised to $9.99/month), although GoodRx Gold provides additional benefits such as telehealth visits for $19 (vs $35 via Amazon Clinic). We think GoodRx will need to accelerate the pace of product innovation (see for example GDRX's new commercial offering with ESI to fend off the AMZN threat. We size the max threat at $75-80M of potential lost revenue," writes Grosslight.

Wells Fargo analyst Stan Berenshteyn reacted to the news with less worry, stating the RxPass announcement "appears to be more bark than bite."

"While Amazon's competitive ambitions shouldn't be dismissed, the move in GDRX appears overdone, as we estimate RxPass addresses ~0.5% of annual domestic generic Rx volumes," argued Berenshteyn, who has an Equal Weight rating and $5.50 price target on GoodRx shares.

By Sam Boughedda

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