Tuesday, Deutsche Bank adjusted its price target on shares of Hims & Hers Health, Inc. (NYSE:HIMS), raising it to $23.00 from the previous $16.00, while maintaining a Hold rating on the stock. The firm's decision follows the company's Q2 earnings report, which was released after market close on Monday, and highlighted a substantial focus on the near-term opportunities presented by GLP-1 injections.
Hims & Hers, which launched its weight loss specialty program in the last quarter of the previous year, has grown the category to a $100 million annual revenue run rate. This growth was significantly boosted by the introduction of GLP-1 injections in May. The company is actively looking to enhance its specialty platform and broaden its range of services, with plans to include Tirzepatide and Liraglutide alongside the already available compounded Semaglutide.
The recent acquisition of an FDA-registered 503B facility by Hims & Hers is anticipated to facilitate faster product adoption and improve long-term margins. However, there was a slight margin erosion in Q2 due to the growth in GLP-1, and the company has not provided specific margin guidance for this drug category. Looking ahead to the latter half of the year, Hims & Hers intends to make strategic investments in both the weight loss segment and its core offerings.
For Q3, the company has issued guidance that seems conservative, with an EBITDA forecast range of $35 million to $40 million, translating to a 9% to 11% margin. This is slightly below the market's margin expectation of approximately 10.6%, which may account for the partial additions of GLP-1. The market is seeking further proof of successful product adoption as the company enters the early stages of introducing new offerings.
In other recent news, Hims & Hers Health reported a significant rise in revenue and user growth for the second quarter of 2024. The company's revenue surged by 52% year-over-year to $316 million, and adjusted EBITDA stood at $39 million. With an addition of nearly 155,000 new users, the total subscriber count escalated to 1.9 million. The company also announced the acquisition of an FDA-registered 503(b) facility, expected to boost its supply chain capabilities.
Hims & Hers Health's weight management specialty achieved a $100 million annual revenue run rate within its first year, and the company anticipates it to be a key specialty in the future. The company also unveiled plans to continue investing in technologies like AI and machine learning to enhance personalized care and outcomes.
In terms of future expectations, the company projected its 2024 revenue to be between $1.37 billion and $1.4 billion, with an adjusted EBITDA between $140 million and $155 million. Furthermore, Hims & Hers Health aims to have over 1 million personalized subscriptions by year-end. These recent developments underscore the company's robust growth and focus on expanding its personalized healthcare offerings.
InvestingPro Insights
With Hims & Hers Health, Inc. (NYSE:HIMS) capturing attention through its Q2 earnings report and the subsequent price target adjustment by Deutsche Bank, it's valuable to consider additional insights from InvestingPro. The company's aggressive expansion into the weight loss category, particularly with GLP-1 injections, has been a significant driver of growth. Reflecting on this, two noteworthy InvestingPro Tips for Hims & Hers include the expectation of net income growth this year and the fact that three analysts have revised their earnings upwards for the upcoming period. These insights align with the company's positive momentum as it scales up its offerings in the weight loss segment.
On the financial metrics front, Hims & Hers currently boasts a market cap of $3.71 billion and trades at a high P/E ratio of 203.1, indicating investor confidence in its growth potential. Moreover, the company has seen an impressive revenue growth of 50.15% in the last twelve months as of Q2 2024, underscoring the successful adoption of its weight loss products. The gross profit margin stands strong at 82.19%, although there's a modest operating income margin of 1.45%. For investors looking for more granularity, InvestingPro offers additional tips on the company's financial health and stock performance.
As Hims & Hers Health, Inc. gears up for its next earnings date on November 4, 2024, and with the stock currently trading at $17.84, close to the InvestingPro fair value estimate of $17.59, the market will be keenly watching the company's strategic investments and their impact on long-term profitability. For those interested in further insights, there are more than a dozen additional InvestingPro Tips available, which could be instrumental in making informed investment decisions.
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