Street Calls of the Week
Investing.com - BofA Securities has reiterated its Underperform rating and $28.00 price target on Hims and Hers (NYSE:HIMS) following an analysis of September sales data. The stock, currently trading at $58.25, has shown remarkable growth with a 140.9% year-to-date return, though InvestingPro analysis suggests the stock is trading above its Fair Value.
The firm expects HIMS to report third-quarter revenue in line with consensus estimates, but notes that deferred revenue will be a greater swing factor than in previous quarters. More concerning to BofA is the trajectory heading into the fourth quarter, with orders reportedly down 16% year-over-year in September. This concern is reflected in broader analyst sentiment, with InvestingPro data showing 4 analysts recently revising their earnings expectations downward.
BofA has lowered its fourth-quarter revenue forecast from $617 million to $590 million, which sits 6.5% below the Street’s $632 million consensus. The firm’s full-year revenue projection now stands at $2,298 million, below the company’s guidance range of $2,300-$2,400 million.
The research note highlights several challenges facing Hims and Hers, including decelerating core growth, weakening order trends, seasonal headwinds for GLP-1 sales amid increasing competition, and potential pressure on conversion rates from changes in direct-to-consumer advertising.
BofA believes the fourth-quarter revenue ramp embedded in Street estimates is likely "an unachievable bar," with its revised $590 million estimate now representing the lowest among analysts covering the stock.
In other recent news, Hims & Hers Health, Inc. released a white paper indicating that 94% of surveyed customers rated their telehealth experience as equal to or better than traditional in-person care. The report drew from a survey of nearly 2,400 customers and routine clinical check-ins. Additionally, Hims & Hers received a warning letter from the U.S. Food and Drug Administration over "false or misleading" marketing claims about its compounded semaglutide products. The FDA flagged statements on the company’s website that compared the products to well-known medications like Ozempic and Wegovy.
In analyst updates, BofA Securities maintained its Underperform rating on Hims & Hers, with a price target of $28.00. The firm noted that while August sales data suggested potential for exceeding third-quarter estimates, September sales showed growth in the low-to-mid 20% range year-over-year, below previous projections. Furthermore, a New York Times op-ed criticized the company’s advertising practices, particularly a Super Bowl ad, which BofA Securities mentioned in its analysis.
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