On Thursday, BofA Securities updated its outlook on Hims & Hers Health, Inc. (NYSE:HIMS) shares, raising the price target to $26 from the previous $22 while maintaining a Buy rating on the stock.
The revision follows the analysis of various data sources, including Bloomberg Second Measure, Sensor Tower, and Similar Web, which indicated an acceleration in the company's online revenue growth for May.
The data showed that while monthly active user (MAU) growth slowed down in May, web visit growth, particularly on the Hers platform, picked up significantly. This surge in web traffic, especially towards the end of May, alongside a rise in observed sales, is believed to be partially driven by the successful launch of the company's GLP-1 product. BofA Securities noted that for every 5,000 GLP-1 customers, there is an estimated addition of approximately $1 million in monthly revenue.
BofA Securities expressed increased confidence in Hims & Hers' ability to surpass short-term estimates in the second quarter, leading to a raised revenue estimate for the company. The firm acknowledges the potential near-term benefits from the GLP-1 product but also advises caution due to possible regulatory risks associated with it.
Despite these concerns, BofA Securities remains positive about the long-term growth prospects of Hims & Hers, citing the company's product differentiation and strong brand presence.
The new price objective of $26 reflects an updated revenue multiple of approximately 4.6 times the projected 2024 enterprise value to revenue, up from the previous multiple of 3.9 times.
InvestingPro Insights
Following BofA Securities' optimistic update on Hims & Hers Health, Inc. (NYSE:HIMS), real-time data from InvestingPro further enriches the outlook for the company. The market capitalization stands at a robust $5.09 billion, showcasing the company's significant presence in the market. Additionally, the impressive revenue growth over the last twelve months, at 55.65%, underpins the positive trajectory BofA Securities anticipates. This growth is further exemplified by the substantial gross profit margin of 82.41%, highlighting the efficiency of Hims & Hers' business model.
InvestingPro Tips suggest that the net income is expected to grow this year, complementing BofA Securities' raised revenue estimate and supporting the company's potential to surpass short-term financial estimates. Moreover, with three analysts having revised their earnings upwards for the upcoming period, there is a consensus building on the company's promising financial future. For readers interested in a deeper dive into Hims & Hers' financial outlook, additional tips are available, with a total of 17 InvestingPro Tips listed for the company, providing a comprehensive analysis that could guide investment decisions.
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