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On Wednesday, BofA Securities maintained its Underperform rating on Hims & Hers Health, Inc. (NYSE:HIMS) with a steady price target of $22.00. The firm’s analysis indicated a significant slowdown in year-over-year sales growth for March, down to 78% from a previous rate that was 45 percentage points higher, ending a five-month trend of accelerating growth. While concerning, InvestingPro data shows the company maintained impressive revenue growth of 69.32% over the last twelve months, with analysts forecasting 58% growth for FY2025. Despite this deceleration, first-quarter online revenue projections are still positive, with expectations ranging from $567 million to $601 million, surpassing the Visible Alpha consensus of $528.4 million.
The report also highlighted a month-over-month decline in the average transaction value for Hims & Hers, the first such decrease since September. Sales of GLP-1, a category of drugs, saw a notable drop in March, which may be attributed to reduced advertising or a shift in strategy as the company moves patients towards personalized treatments like liraglutide or oral alternatives for weight loss.
Furthermore, BofA Securities adjusted its analysis to account for a higher percentage of longer-duration subscriptions. This adjustment suggests that GLP-1 sales could represent about 38-40% of first-quarter sales, hinting at a core growth rate of approximately 35% year-over-year. Although this figure is an improvement over initial estimates of 30-32%, it still marks a slowdown from the 39% core growth observed in the fourth quarter of the previous year.
The full-year 2025 guidance provided by Hims & Hers implies an acceleration in core growth, which contradicts the recent trend of decelerating growth rates. The analysis anticipates that to meet the $725 million target for weight loss revenue, an increased contribution from liraglutide and oral weight loss products will be necessary, particularly if semaglutide sales decline significantly after the second quarter.
In conclusion, while BofA Securities made minor adjustments to their estimates, they reiterated their Underperform rating and $22 price objective for Hims & Hers Health, Inc., pointing to the challenges the company may face in sustaining its growth trajectory.
In other recent news, Hims & Hers Health, Inc. reported first-quarter online revenue projections between $567 million and $601 million, surpassing the Visible Alpha consensus of $528.4 million, despite a noted slowdown in sales growth. Analysts at BofA Securities maintained an Underperform rating with a $22 price target, citing a decline in the average transaction value and a significant decrease in GLP-1 drug sales in March. Meanwhile, Jefferies raised their price target to $25, maintaining a Hold rating, and noted the company’s strategic shift to marketing branded GLP-1 medications, which could impact customer retention due to higher costs.
Truist Securities maintained a Hold rating with a $39 target, highlighting the expansion of Hims & Hers’ weight-loss product range to include generic liraglutide and branded tirzepatide, though they do not expect significant revenue contributions from the latter. Leerink Partners kept a Market Perform rating with a $40 target, observing the company’s addition of Eli Lilly (NYSE:LLY)’s Zepbound and generic liraglutide to its offerings, while expressing caution about the high cost of Zepbound affecting demand. BofA Securities reiterated their Underperform rating, noting that the addition of Zepbound, priced at $1,899 per month, is unlikely to significantly impact sales due to expected low margins.
Overall, Hims & Hers’ recent product expansions and strategic shifts have prompted a range of analyst responses, reflecting both optimism and caution regarding the company’s financial prospects and competitive positioning.
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