Hims & Hers Health (HIMS), the telehealth and wellness platform, declined over 9% in after-hours trading yesterday after reporting mixed results for the second quarter. Following the Q2 results, BofA analyst Allen Lutz reiterated a Sell rating and $28 price target, citing weaker-than-expected core trends and limited upside relative to peers. The target price indicates downside potential of about 55% from current levels.
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Core Business Remains a Drag
Lutz said Hims delivered a mixed Q2, with revenue coming in below estimates but profits ahead of expectations. The company posted $544.8 million in revenue, short of both BofA’s $554 million estimate and the Street consensus estimate of $551.67 million. However, adjusted EBITDA came in at $82.2 million, well above forecasts.
The analyst said GLP-1 drug sales were above his expectations, hitting $190 million in Q2. However, he noted that growth in the company’s core business was weaker than expected.
Analyst Questions Growth after ZAVA Deal
The analyst pointed out that Hims’ recent purchase of ZAVA, a European telehealth firm, is expected to add at least $50 million in revenue in the second half of the year. However, the company kept its full-year guidance unchanged at $2.3 to $2.4 billion. This suggests that growth in Hims’ core business may be slowing.
The analyst said investors will likely look for more clarity on how much of the company’s growth is being driven by ZAVA versus its existing business operations.
What to Watch Next
Lutz said investors should keep an eye on several key issues going forward, including how GLP-1 sales perform in the future, whether the company can continue attracting new customers, how well the ZAVA acquisition is integrated, and how Hims executes its expansion into hormone therapy and the Canadian market.
Is HIMS Stock a Good Buy?
Turning to Wall Street, HIMS stock has a Hold consensus rating based on one Buy, seven Holds, and two Sells assigned in the last three months. At $42.33, the average Hims & Hers stock price target implies a 33.18% downside potential.
