Truist Securities has initiated coverage on Guardian Pharmacy Services, Inc (NYSE:GRDN), which operates long-term care pharmacies that facilitate the full lifecycle of pharmacy administration and associated consultative services for residents of long-term healthcare facilities (LTCFs).
As of June 30, 2024, the company operated 50 pharmacies that served approximately 174,000 residents in approximately 6,700 LTCFs across 36 states.
Guardian Pharmacy Services priced its initial public offering of 8 million shares at $14.00 per share. The company started trading on September 26.
Truist notes the sizable market opportunity of around $24.8 billion of U.S. institutional pharmacy revenue in 2024.
The analyst observes strong industry trends driven by the aging U.S. population and an increase in residents at assisted living facilities, along with a rise in chronic conditions and multiple diagnoses.
"Given these industry dynamics, we view Guardian as well positioned given their differentiated scale, suite of capabilities," Truist analyst writes.
The analyst sees a market share of over 12%, with a leading presence in many regions and an impressive assisted living resident adoption rate of approximately 88%.
The analyst adds that Guardian has strategically targeted the more lucrative markets of assisted living and behavioral health facilities/group homes.
The analyst initiates with a Buy rating and a price target of $22.
Truist says the industry dynamics are advantageous, as the market is notably fragmented, and regulatory requirements create significant barriers to entry. Additionally, demographic trends are likely to provide a boost, particularly as the aging population increasingly relies on prescription medications.
Stable margins have accompanied Guardian's rapid membership growth, and the company's strong cash flow and appealing financial flexibility will enable continued investments in growth and M&A, the analyst says.
Lastly, Truist foresees ongoing expansion efforts in new and established markets via organically and M&A activities.
Price Action: GRDN stock is down 1.13% at $17.48 at last check Monday.
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