On Monday, BofA Securities increased its price target for Hims & Hers Health, Inc. (NYSE:HIMS) shares to $22.00, up from the previous $17.25, while maintaining a Buy rating on the stock.
The firm's decision came after a meeting with the company's CFO, Yemi Okupe, and Director of Investor Relations, Bill Newby. The conversation revealed a positive outlook on the potential of GLP-1 drugs, despite acknowledging certain risks.
The company has taken a cautious approach to the initial launch of GLP-1 treatments, with plans to utilize the FDA shortage exemption in the short term. The strategy includes a transition to the compounding exemption after the shortage is resolved.
BofA Securities acknowledged skepticism regarding the long-term viability of the GLP-1 market but noted the possibility of near-term revenue upside, as current forecasts do not account for GLP-1 sales.
Hims & Hers has also found success in encouraging customers to commit to longer subscription terms and to purchase personalized products, which have led to higher order values. This has been achieved despite the company reducing prices in previous quarters.
BofA Securities has applied a higher multiple to its valuation, moving from 3.0 to 3.9 times the company's projected 2024 enterprise value to sales ratio. This adjustment reflects the anticipated revenue growth over the next one to two years.
The revised price objective of $22.00 represents an increase based on the firm's reassessment of the company's sales prospects, particularly in the context of its GLP-1 related products.
BofA Securities remains positive on the stock, reiterating its Buy rating and highlighting the potential for revenue growth in the near term.
InvestingPro Insights
Following the upbeat assessment from BofA Securities, looking at the real-time data from InvestingPro provides additional insights into Hims & Hers Health, Inc. (NYSE:HIMS). The company's market capitalization stands at $4.17 billion, reflecting its substantial presence in the healthcare sector. Notably, the firm has experienced impressive revenue growth in the last twelve months as of Q1 2024, with an increase of over 55%. This aligns with BofA's optimism about the company's sales prospects and the potential revenue growth from GLP-1 treatments.
InvestingPro Tips highlight several positive trends, including significant returns over various periods, with a remarkable 119.93% price total return over the last six months. Additionally, three analysts have recently revised their earnings upwards for the upcoming period, signaling confidence in the company's financial trajectory. Moreover, analysts predict the company will be profitable this year, which could further bolster investor sentiment.
For those interested in a deeper analysis, InvestingPro offers more tips on Hims & Hers Health, Inc. To explore these insights and make informed investment decisions, consider using the promo code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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