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On Tuesday, Leerink Partners adjusted its price target for Hims & Hers (NYSE:HIMS) shares, increasing it to $40 from the previous $24, while maintaining a Market Perform rating. The adjustment comes following the resolution of the semaglutide shortage, which is anticipated to allow Hims & Hers to focus more on its inherent growth potential rather than market speculation.
Leerink Partners highlighted that the end of the semaglutide shortage positions Hims & Hers to capitalize on its underlying growth trajectory. However, the firm noted that there are still uncertainties surrounding the company’s growth vectors, despite the promising overall growth projections. The questions pertain to the conversion rates as the company transitions from selling primarily compounded semaglutide to a combination of oral medications, generic liraglutide, and some personalized semaglutide.
The company’s guidance suggests over $725 million in revenue from its weight management segment. Yet, the dynamics of this shift and its impact on future sales remain somewhat unclear. Leerink suggested that there could be potential for revenue upside if semaglutide shortages reoccur or if litigation delays the end of the shortage. Conversely, there could be risks if the market gravitates back towards branded drugs.
The firm also pointed to the rest of Hims & Hers’ business, which is expected to grow by more than 30% at the midpoint. However, the factors driving this growth are not entirely transparent, especially considering that the implied core revenue growth for the fourth quarter appears to be significantly lower than this figure. The increased focus on personalization and multi-condition orders adds complexity to the revenue dynamics, making it more challenging to discern the underlying growth potential.
Leerink Partners concluded that, based on the long-term growth outlook and the business model of Hims & Hers—which relies on selling prescription drugs in a tech-enabled and efficient manner—a 20-25x EV/EBITDA multiple range is reasonable. This valuation is contingent on current growth expectations and could be subject to change. The firm’s new price target reflects an increase in the target multiple from roughly 20x CY25 EV/EBITDA to 24x CY26 EV/EBITDA. Despite the pathway to growth, Leerink does not foresee substantial upside from the current level, hence the reiteration of the Market Perform rating.
In other recent news, Hims & Hers Health, Inc. reported impressive fourth-quarter results, with revenue reaching $481.1 million, marking a 95% increase year-over-year. This exceeded both BTIG’s and consensus estimates, which were $474 million and $470 million, respectively. The company’s adjusted EBITDA for the quarter was $54.1 million, slightly below BTIG’s expectation of $55.2 million but above the consensus estimate of $54 million. Looking ahead, Hims & Hers provided revenue guidance for 2025 between $2.3 and $2.4 billion, surpassing previous estimates from BTIG and FactSet. The company anticipates its weight loss specialty to contribute over $725 million in revenue for 2025.
In terms of analyst ratings, Needham raised its price target for Hims & Hers to $61, maintaining a Buy rating, citing strong growth prospects. Morgan Stanley (NYSE:MS) maintained an Equalweight rating with a $60 target, focusing on the potential of weight loss treatments. Meanwhile, Leerink Partners maintained a Market Perform rating with a $24 target, noting the company’s revenue exceeded expectations but EBITDA fell short. Conversely, BofA Securities remained skeptical, maintaining an Underperform rating with a $21 target, expressing concerns over core revenue growth and competition. BTIG reaffirmed its Buy rating with an $85 target, highlighting the company’s strategic focus on weight loss offerings as a key driver of growth.
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