The case for the overvalued Hims & Hers stock

By:
on May 20, 2024
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  • Hims & Hers shares have more than doubled in the past 12 months.
  • The company’s revenue and user growth are soaring substantially.
  • It has expanded its presence in the fast-growing weight loss industry.

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Hims & Hers Health (NYSE: HIMS) stock price is doing well, helped by its strong growth and demand for its core products. It soared by over 30% this year and by more than 112% this year. It has also surged by over 37% in the past 12 months, giving it a market cap of $3.13 billion.

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Growth is gaining momentum

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Hims & Hers Health’s business is doing well. Data released this month revealed that its total revenue soared by 46% in Q1 to over $278 million as its subscribers roared by 41% to 1.7 million. This performance makes it one of the fastest growing companies in the US.

The company’s gross margin also expanded to 82% from 80% in Q1’23 while its net income soared to $11.1 million. The management believes that the company will continue boosting its profits in the coming years. 

Hims & Hers expects that its revenue growth will be between $292 million and $297 million in Q2 while the adjusted EBITDA will be between $30 and $30 million. 

The company’s performance is simply because the company focuses on some of the biggest industries globally. It is growing its market share in areas like sex, anxiety, weight loss, hair, and skin. Each of these divisions has a total addressable market worth billions of dollars.

Hims & Hers aims to become a major provider of weight loss solutions. On Monday, it announced that it would start offering cheap compounded versions of Novo Nordisk’s semaglutide drug

Therefore, with Hims & Hers, we have a fast-growing company with millions of users and one that is targeting some of the biggest industries in the world. It also has sticky customers across the genders. 

Analysts believe that Hims revenue will jump to over $1.2 billion this year followed by $1.5 billion in 2025. This growth could help to justify its hefty valuation, since it has a forward P/E ratio of 90.

Hims & Hers stock price forecast

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Hims & hers

The daily chart shows that the HIMS share price has been in a strong bull run this year. It has crossed the important resistance point at $17.17, its highest swing on March 25th. Moving above that level invalidated the double-top pattern that has been forming. It remains significantly higher than the 50-day and 100-day moving averages.

At the same time, the Relative Strength Index (RSI) and the MACD indicators have all pointed upwards. Therefore, the short-term outlook is where HIMS drops and retests the support at $17.17 and then resumes the bull run.

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