BofA lifts Hims & Hers stock target to $21, maintains underperform

On Thursday, BofA Securities updated its outlook on Hims & Hers Health, Inc. (NYSE:HIMS), raising the price target to $21 from the previous $18 while maintaining an Underperform rating on the stock. The adjustment comes in light of new data indicating a significant year-over-year growth in the company’s online sales.

According to Bloomberg Second Measure (BSM) data, Hims & Hers experienced a 104% increase in sales year-over-year for January. The data also suggests that GLP-1s, a category of drugs, now represent approximately 40% of the company’s gross online sales, a notable rise from the 26% estimated in the fourth quarter of the previous year. Analysts at BofA Securities project that based on these trends, the first quarter of 2025 could see online revenue ranging between $551 million and $574 million. This forecast represents a growth of 106-114% year-over-year and surpasses the Visible Alpha consensus estimate of $489.4 million.

The report also notes an acceleration in the contribution of GLP-1s to the company’s sales, which suggests a faster deceleration in the company’s core business, from 42-45% growth in the fourth quarter to 31% in the first quarter of 2025. Analysts believe that GLP-1s could account for more than half of Hims & Hers’ sales by the second quarter of 2025, indicating that the company and the compounding market are rapidly gaining market share—a fact acknowledged by pharmaceutical giant Novo Nordisk (NYSE:NVO) during a recent earnings call.

However, the report cautions that the growth trajectory could face headwinds if GLP-1s are phased out of the company’s sales model after the second quarter. The future of the GLP-1 opportunity remains uncertain, and while the duration of this growth segment is ambiguous, BofA Securities expects that compounded semaglutide, a GLP-1 drug, will eventually be removed from the sales model, with their analysis considering contributions through the first half of 2025.

Despite the positive forecast for near-term growth, BofA Securities reiterates its Underperform rating on Hims & Hers Health, Inc. The new price objective of $21 is based on a 19x CY25E EV/EBITDA multiple, identical to the valuation multiple used in the previous price target.

In other recent news, Hims & Hers Health has announced its acquisition of Trybe Labs, an at-home lab testing facility, which will enhance its personalized healthcare offerings. This strategic move allows the company to integrate whole body testing, including at-home blood draws, into its platform, aiming to improve clinical decision-making through richer data. The acquisition was funded using cash on hand, and the rollout of these services is expected over the next year. In response to this development, Canaccord Genuity raised its price target for Hims & Hers to $68, maintaining a Buy rating, citing positive growth prospects. Similarly, BTIG increased its price target to $85, also maintaining a Buy rating, reflecting optimism in the direct-to-consumer health market. However, Morgan Stanley (NYSE:MS) downgraded the stock from Overweight to Equalweight, despite raising the price target to $60, due to concerns about the stock’s recent performance and potential supply uncertainties. These developments underscore a mixed but generally positive outlook from analysts regarding Hims & Hers’ growth trajectory and market positioning.

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