On Tuesday, Leerink Partners updated their financial outlook for shares of Hims & Hers Health, Inc. (NYSE: HIMS), raising the price target to $26.00 from the previous $21.00, while maintaining a Market Perform rating on the company's stock. The adjustment comes ahead of the firm's third-quarter results, which are scheduled to be announced on November 4, 2024, after the market closes.
The revised stock price target reflects Leerink's anticipation of a robust revenue report for the quarter, with an estimate of $398.8 million, surpassing both the Visible Alpha consensus of $382.3 million and the company's own guidance range of $375 million to $380 million.
This estimate is primarily driven by the full quarter inclusion of GLP-1 sales, which were a minor component of revenue in the previous quarter, contributing less than $15 million to the total $315 million reported.
Hims & Hers' GLP-1 sales are expected to show rapid growth and complement existing product lines within weight management and legacy categories like hair loss and sexual dysfunction treatments. In light of this, Leerink has also adjusted its EBITDA forecast for the company, now expecting $39.0 million, which is slightly above the consensus of $38.7 million and within the guided range of $35 million to $40 million by management.
Despite the positive revenue outlook, Leerink notes that the increased revenue estimates are somewhat tempered by a gross margin mix that may limit EBITDA growth. As a result of the revised estimates and the company's accelerated growth, Leerink has increased the target multiple from approximately 20 times CY25 EV/EBITDA to approximately 25 times.
However, Leerink expressed caution regarding the long-term sustainability of GLP-1 sales and its impact on the company's overall growth trajectory. While acknowledging Hims & Hers' potential for sustainable long-term growth, the firm suggests that much of the upside may already be reflected in the current stock price. Alongside the updated financial estimates, Leerink has also introduced quarterly FY25 estimates in their analysis.
In other recent news, Hims & Hers Health, Inc. has made significant strides in its operations. The company recently appointed Dr. Jessica Shepherd as the inaugural Chief Medical Officer for its Hers division, a strategic move aimed at enhancing its focus on personalized women's healthcare.
In financial developments, Hims & Hers reported a robust 52% year-over-year revenue increase in Q2 2024, reaching $316 million, with an adjusted EBITDA of $39 million.
Analyst firms have also been active in their assessments of the company. BofA Securities raised its price target for Hims & Hers from $23 to $25, maintaining a Buy rating on the stock. Truist Securities held steady with a Hold rating, citing the FDA's decision to revisit the shortage of Tirzepatide and the continued authorization for compounding pharmacies to produce its compounded version.
Canaccord Genuity sustained its Buy rating on shares of Hims & Hers, highlighting the potential of its compounded GLP-1 medications amid rising obesity trends.
In regulatory news, the FDA has announced a reassessment of the availability of tirzepatide, a drug previously on the agency's shortage list. This decision could have implications for Hims & Hers' operations, particularly its compounded GLP-1 product. These are among the recent developments that are shaping Hims & Hers' current business landscape.
InvestingPro Insights
Hims & Hers Health, Inc. (NYSE: HIMS) has been demonstrating impressive financial performance, aligning with Leerink Partners' optimistic outlook. According to InvestingPro data, the company's revenue growth stands at a robust 50.15% over the last twelve months as of Q2 2024, with quarterly revenue growth in Q2 2024 reaching an even higher 51.82%. This strong growth trajectory supports Leerink's expectations for a solid Q3 revenue report.
InvestingPro Tips highlight that HIMS has been profitable over the last twelve months, with analysts predicting continued profitability this year. This aligns with Leerink's adjusted EBITDA forecast and suggests the company is successfully converting its revenue growth into bottom-line results.
The stock's performance has been particularly noteworthy, with InvestingPro data showing a staggering 299.31% price total return over the past year. This exceptional return reflects investor confidence in the company's growth strategy, including the integration of GLP-1 sales that Leerink emphasized.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for HIMS, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.