Hims & Hers Health: Hold Rating Amid Market Challenges and Competitive Pressures

TD Cowen analyst Jonna Kim has maintained their neutral stance on HIMS stock, giving a Hold rating today.

Jonna Kim has given his Hold rating due to a combination of factors influencing Hims & Hers Health’s current market position. Despite the company delivering a significant first-quarter performance with a notable increase in sales, the guidance for the second quarter fell short in terms of revenue expectations. This shortfall is attributed to the transition of semaglutide subscribers to alternative options, either within HIMS or through other platforms. The overall weight loss revenue for the fiscal year is projected to remain strong, yet the challenge lies in maintaining consistent growth amidst increasing competition and tougher year-over-year comparisons.
While HIMS is recognized for its strong brand and personalized services, the competitive landscape, particularly in the distribution of GLP-1 medications like Wegovy, is intensifying. The company’s non-GLP-1 revenue streams have shown growth, but at a moderated pace compared to previous quarters. Additionally, the slowdown in quarterly net subscriber additions highlights the higher customer acquisition costs associated with the weight loss segment. The partnership with Novo, although significant, may not drive substantial growth due to pricing dynamics and competitive pressures. These factors collectively contribute to the Hold rating as the company navigates these market challenges.

In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $40.00 price target.