Jim Cramer says you may start buying GoodRx’s stock amid IPO

CNBC Mad Money host, Jim Cramer on Wednesday hyped the capabilities and potential of GoodRx, but thinks it would be best for investors to hold on a little while before making large investments in the newly public company.

GoodRx priced its initial public offering at $33 per share. The company’s stock opened at $46 per share but closed Wednesday’s session at $50.50 per share at a gain of 53%.

Cramer describes the digital health company as a “great story” with “fabulous financials”, and would possibly make a good deal for investors. “I think you can actually nibble at GoodRx tomorrow if we have a pullback,” he said.

“I actually would like it to come back to the thirties, ideally down more than $10 from here, and that’s not unrealistic when you see how horrible the market is,” said Cramer.

According to the television host, GoodRx, which was founded in 2011 was ranked No. 20 on CNBC’s Disruptor 50 list this year. The company already has a lot of positive ratings and commendations on helping people find lower prices on prescribed drugs.

Cramer said the issue of lowering the cost of prescription drugs was a matter of consensus between President Trump and Democratic presidential nominee Joe Biden. He said Republicans always avoided getting involved with the free markets while “Democrats are afraid to govern.”

“So, if you want relief from sky-high drug prices, the only help you’re going to get is from GoodRx and other companies like it,” he said, referring to the company as the “unrivaled leader” in the industry.

The company has nearly 5 million monthly average users, according to Cramer. Adding that, he is also a customer of GoodRx. The company makes money from the pharmacy benefits managers it partners with.

“The company estimates that they’ve saved people $20 billion so far, … and they’ve only just gotten started/ They saved me $50,000 last year.”

Besides its consumer commitment, Cramer says the next intriguing thing about GoodRx is its financials. The company posted revenue growth of 48% in the first half of 2020 compared to the same period in the previous year. Its sales rose to $257 million from $173 million.

“The only thing better than turbo-charged revenue growth is turbo-charged earnings growth, which GoodRx has in spades,” Cramer said. He also noted that the company earned $55 million in the first six months of 2020 compared to the $31 million it earned in the same period a year ago, a 77% increase.

According to Cramer, the only issue with GoodRx is its stock price. “If we assume the company can keep growing rapidly, you could argue it’s trading at 60 times what it could potentially make in 2022, but it’s still pretty pricey.”