On Tuesday, Leerink Partners updated its financial outlook on Hims & Hers Health, Inc. (NYSE: HIMS) shares, increasing its price target to $26.00 from $21.00 previously, while maintaining a Market Perform rating on the company's stock was retained. The adjustment comes ahead of the company's third quarter results, which are scheduled to be announced on November 4, 2024, after the market closes.

The revised share price target reflects Leerink's expectation of a robust revenue report for the quarter, with an estimate of $398.8 million, exceeding both the Visible Alpha consensus of $382.3 million and the company's own guidance range of 375 to 380 million US dollars.

This estimate is based primarily on the inclusion of full-quarter GLP-1 sales, which represented only a small portion of sales in the prior quarter and contributed less than $15 million to the total reported $315 million.

Hims & Hers' GLP-1 sales are expected to experience rapid growth, complementing existing product lines in weight management and older categories such as hair loss and sexual dysfunction treatments. With this in mind, Leerink has also adjusted its EBITDA guidance for the company and now expects $39.0 million, slightly above the consensus of $38.7 million and within management's range of 35 to 40 million US dollars.

Despite the positive revenue outlook, Leerink notes that the increased revenue estimates are somewhat tempered by a gross margin mix that could limit EBITDA growth. Due to the company's revised estimates and accelerating growth, Leerink has increased the target multiple from approximately 20x CY25 EV/EBITDA to approximately 25x.

However, Leerink expressed caution about the long-term sustainability of GLP-1 sales and their impact on the company's overall growth trajectory. While the company recognizes Hims & Hers' potential for sustainable long-term growth, it notes that much of the upside potential may already be reflected in the current share price. In addition to the updated financial estimates, Leerink also introduced quarterly estimates for FY25 in its analysis.

In other recent news, Hims & Hers Health, Inc. has made significant progress in its operations. The company recently hired Dr. Jessica Shepherd named the first chief medical officer for its Hers division, a strategic move aimed at increasing its focus on personalized healthcare for women.

In terms of financial performance, Hims & Hers reported a robust 52% year-over-year revenue increase to $316 million in Q2 2024, with Adjusted EBITDA of $39 million.

Analyst firms also took an active part in assessing the company. BofA Securities raised its price target on Hims & Hers to $25 from $23 and maintained a Buy rating on the stock. Truist Securities maintained a steady “Hold” rating, citing the FDA's decision to re-evaluate the tirzepatide shortage and continued approval for drug pharmacies to produce the compounded version.

Canaccord Genuity maintained its Buy rating on Hims & Hers shares, emphasizing the potential of its GLP-1 compounded drugs amid rising obesity trends.

In regulatory news, the FDA has announced a reevaluation of the availability of tirzepatide, a drug that was previously on the agency's shortlisted list. This decision could have an impact on Hims & Hers' business, particularly its GLP-1 compound product. These are some of the recent developments shaping Hims & Hers' current business landscape.

Investing Pro Insights

Hims & Hers Health, Inc. (NYSE: HIMS) has demonstrated impressive financial performance consistent with Leerink Partners' optimistic outlook. According to data from InvestingPro, the company's revenue growth over the last twelve months (as of Q2 2024) is at a robust 50.15%, with quarterly revenue growth reaching an even higher 51.82% in Q2 2024. This strong growth trajectory supports Leerink's expectations for a solid third quarter sales report.

InvestingPro Tips highlight that HIMS was profitable over the last twelve months and analysts forecast continued profitability this year. This is in line with Leerink's adjusted EBITDA forecast and suggests the company is successfully converting its revenue growth into net results.

The share's performance is particularly noteworthy: InvestingPro's data shows a breathtaking total price return of 299.31% last year. This exceptional return reflects investor confidence in the company's growth strategy, including the integration of GLP-1 sales highlighted by Leerink.

For investors who want a more comprehensive analysis, InvestingPro offers 14 additional tips for HIMS that provide a deeper understanding of the company's financial health and market position.

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