GDRX

We rate GoodRx Holdings, Inc. (GDRX) as a Reduce with a composite score of 40.4/100 at a current price of $2.39. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (52th percentile) and quality (51th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (25th percentile) and investment (39th percentile) tempers our overall conviction. We assign a No Moat rating (39/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

GoodRx Holdings, Inc. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 40.4/100 places it at rank #3496 in our full 7,333-stock universe. At $1.5B in market capitalization, GoodRx Holdings, Inc. is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -2% combined with momentum at the 25th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 93% (+33.4pp vs sector) narrow to operating margins of 11% (+7.1pp vs sector) and net margins of 3.6%, yielding a gross-to-net conversion rate of 4%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $2.39, GoodRx Holdings, Inc. is trading near fair value based on current fundamentals. Our value factor score of 52/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 28.9x (a 22% premium to the sector median of 23.7x), EV/EBITDA of 5.1x (discounted to peers), P/B of 1.4x, P/S of 1.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to GoodRx Holdings, Inc.. Key risk factors include significant leverage (121% debt-to-equity), below-average price stability (40th percentile), the combination of leverage (121% D/E) and thin margins (3.6% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (121% debt-to-equity); below-average price stability (40th percentile); the combination of leverage (121% D/E) and thin margins (3.6% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 40th percentile and quality factor at the 51th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 93% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate GoodRx Holdings, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (4.8%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — GoodRx Holdings, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, GoodRx Holdings, Inc. receives a Reduce rating with a composite score of 40.4/100 (rank #3496 of 7,333). Our quantitative framework assigns a No Moat (39/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 41/100.

Our analysis does not support a constructive view on GoodRx Holdings, Inc. at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.