On Thursday, Piper Sandler adjusted its price target on shares of Hims & Hers Health, Inc. (NYSE:HIMS), increasing it to $18 from the previous target of $16, while keeping a Neutral rating on the stock. The firm's decision comes amidst anticipation of favorable near-term results and the likelihood of raised guidance for the current quarter.
The analyst at Piper Sandler expressed caution regarding the long-term outlook for Hims & Hers, particularly concerning the company's involvement with GLP-1 drugs. Despite the potential for short-term stock gains, the analyst highlighted several risks associated with GLP-1s that could affect the stock's future performance. These risks include possible litigation from larger pharmaceutical companies, credibility challenges stemming from recent negative publicity, and questions about the safety and effectiveness of compounded GLP-1s.
Additionally, the analyst pointed out that once the supply of branded GLP-1 products stabilizes, the demand for Hims & Hers' offerings might diminish. Currently, Hims & Hers provides a branded option at a significantly higher retail price, which the analyst believes may not be a sustainable strategy.
The analysis also touched upon competitive risks facing other aspects of Hims & Hers' business, particularly in terms of pricing. While market expectations account for some gross margin contraction in future years, Piper Sandler is concerned that it may not be sufficient. The firm also worries that elevated marketing expenditures could continue, potentially restricting the company's earnings capabilities.
In other recent news, Hims & Hers Health, Inc. has been the subject of several analyst notes. TD (TSX:TD) Cowen maintained a positive outlook on the company, raising its share price target from $15.00 to $25.00, reflecting the company's potential growth in the compounding pharmacy market.
Concurrently, BofA Securities increased its price target for Hims & Hers twice, first to $22.00 and then to $26.00, citing the company's online revenue growth and the potential of its GLP-1 product for weight loss.
Canaccord Genuity (TSX:CF) also revised its price target for the company to $24.00, following the announcement of a new addition to its weight loss treatment options. However, Citi revised its stance on Hims & Hers, downgrading the company from Buy to Neutral, despite raising the price target to $20.00 due to potential regulatory risks associated with the GLP-1 launch.
InvestingPro Insights
Piper Sandler's recent price target adjustment for Hims & Hers Health, Inc. (HIMS) to $18 comes at a time when the company is experiencing significant movements in its market performance. According to real-time data from InvestingPro, Hims & Hers has a market capitalization of $4.57 billion and has seen robust revenue growth of 55.65% over the last twelve months as of Q1 2023. Despite the company's impressive revenue figures, it's important to note the high Price/Book multiple of 13.18, which suggests a premium valuation relative to the company's book value.
InvestingPro Tips indicate that analysts are optimistic about the company's near-term prospects, with two analysts having revised their earnings upwards for the upcoming period. Additionally, Hims & Hers is expected to grow net income this year, aligning with the anticipation of favorable near-term results mentioned by Piper Sandler. These insights could be particularly relevant for investors considering the stock's potential for growth against the backdrop of competitive and regulatory challenges highlighted by the analyst.
For readers looking to delve deeper into Hims & Hers' financial outlook and gain access to a comprehensive set of InvestingPro Tips, visiting the dedicated page at https://www.investing.com/pro/HIMS would provide valuable guidance. There are 13 additional InvestingPro Tips available, which can be accessed with a special offer. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, offering a more nuanced investment perspective on Hims & Hers Health, Inc.
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