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Investing.com - BofA Securities maintained its Underperform rating and $28.00 price target on Hims and Hers (NYSE:HIMS) following a New York Times op-ed that criticized the company’s advertising practices. According to InvestingPro data, HIMS trades at a P/E ratio of 70.58x and is currently overvalued based on its Fair Value analysis, despite showing remarkable revenue growth of 88.69% over the last twelve months.
The op-ed, written by Dr. Makary, specifically called out HIMS’ Super Bowl advertisement for not providing side effect information, despite the ad not mentioning any weight loss offering by name and only briefly showing unlabeled pills and injectable vials.
BofA analyst Allen Lutz suggested that HIMS and other online pharmacy competitors will likely need to add more precautionary details to their advertisements due to FDA regulations, potentially resulting in weaker advertising conversion rates as patients consider drug side effects.
The firm noted that given the increasing competition and slower growth in core markets at HIMS, the company faces continued pressure on core growth and lifetime value to customer acquisition cost ratios (LTV/CAC).
While BofA views HIMS as best positioned among competitors to adjust its business model due to strong brand equity and first-to-market position, the firm expects continued volatility and pressure on customer acquisition costs in the near term.
In other recent news, Hims & Hers Health has signed a significant 15-year lease agreement for a new facility in New Albany, Ohio. The premises, spanning approximately 352,012 square feet, will be utilized for various purposes including office, research and development, laboratory, manufacturing, and pharmaceutical dispensing. Despite a slowdown in second-quarter revenue, BTIG has reiterated its Buy rating and set a price target of $85.00, attributing the revenue deceleration to changes in the 503B bulk compounding business. Canaccord Genuity also maintains a Buy rating with a $68.00 price target, citing the company’s structural advantages and growth potential. On the other hand, BofA Securities continues to rate Hims and Hers as Underperform, with a $28.00 price target, due to increased competition in the direct-to-consumer healthcare market. BofA also notes mixed signals in the company’s GLP-1 franchise and concerns about core business slowdown. These diverse perspectives highlight the varying analyst opinions on Hims and Hers’ future prospects.
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