Hims & Hers (HIMS), the digital healthcare company catering directly to consumers, appears poised for a breakout based on technical and fundamental factors. The stock, which debuted via a special purpose acquisition company (SPAC) sponsored by Oaktree Capital Management in late 2020, has recovered significantly after the initial SPAC rout. Now, with a controversial new weight loss product and a diversified healthcare platform, Hims & Hers is attracting investor attention.
A Million-Member Strong Telehealth Platform
Beyond the recent buzz surrounding its weight loss offering, Hims & Hers boasts a robust telehealth platform serving over one million subscribers. This platform offers a wide range of services, including treatments for mental health, hair loss, dermatological concerns, sexual wellness, and more. The company leverages the convenience of telemedicine consultations, allowing patients to access healthcare solutions discreetly and efficiently.
Capitalizing on the Weight Loss Boom
The weight loss market represents a massive opportunity, and Hims & Hers is strategically positioned to capture a significant share. Analyst estimates suggest that global sales of GLP-1 weight loss drugs, a category Hims & Hers has entered, could reach $130 billion by 2030. The company’s advantage lies in exploiting a regulatory loophole. Through a process called compounding, Hims & Hers can offer a GLP-1 injection over the counter, bypassing the prescription requirement for similar drugs offered by competitors like Eli Lilly and Novo Nordisk. Additionally, Hims & Hers significantly undercuts its competitors on price, offering an 85% discount on its weight loss membership plan.
Technical Indicators Flash Green
The technical analysis of Hims & Hers paints an optimistic picture. The daily chart displays a clear upward trend following the company’s last three earnings reports and the announcement of the weight loss drug. Trading volume surged on the announcement day, exceeding 70 million shares compared to the average daily volume of around 18 million. With the next earnings report scheduled for August 5th, analysts anticipate positive results that could propel the stock to new all-time highs, potentially reaching $35 per share.
Reasonable Valuation in a High-Growth Market
Even at a projected price of $35, Hims & Hers appears attractively valued, trading at a multiple of 44 times its 2025 earnings estimate. This multiple seems reasonable considering the explosive growth potential within the telehealth and weight loss segments of the healthcare industry.
Conclusion
Hims & Hers presents a compelling investment opportunity. The company’s diversified telehealth platform, coupled with its strategic entry into the weight loss market, positions it for significant growth. With a loyal subscriber base, a disruptive pricing strategy, and a potential upcoming earnings beat, Hims & Hers is a stock to watch closely.
