Hims & Hers Health (NYSE:HIMS) stock just handed you an opportunity and if you’re a contrarian investor, your blood should be pumping right about now. Stunningly, the stock surged higher before plunging despite Hims & Hers Health’s overwhelmingly positive second-quarter 2023 earnings results. Therefore, I am bullish on HIMS stock and feel that this is the time to take advantage of the market’s strange response.
Based in San Francisco, Hims & Hers Health provides a health and wellness platform. The company’s services and products include telemedicine, prescription medications, vitamins and other supplements, cosmetics, and more.
Could HIMS stock be the healthcare investment that most financial traders are missing out on? It’s definitely possible, as the data shows amazing user-base expansion and online-revenue acceleration for under-the-radar start-up Hims & Hers Health.
Hims & Hers Health Expands Into a High-Need Healthcare Niche
Before we get into the down-and-dirty details of Hims & Hers Health’s financial stats, we should acknowledge TD Cowen’s ambitious $11 price target and Outperform rating on HIMS stock. According to The Fly, the TD Cowen analysts believe that the current Hims & Hers Health share price hasn’t fully factored in the company’s growth potential with a $150 billion total addressable market. To that, I’d add that Hims & Hers Health’s addressable market is expanding, as the company is making an ambitious move into men’s cardiovascular health.
Gentlemen, imagine your healthcare provider offering you a personalized treatment that combines “active ingredients found in clinically proven medications to address multiple conditions in one pill.” The idea would be to provide a tailor-made, easy-to-use preventive solution focused on men’s cardiovascular health.
This vision is turning into a reality, as Hims & Hers Health is launching the Heart Health by Hims program. Through this program, healthcare providers will be able to combine ingredients “found in clinically proven [erectile dysfunction] medications and statins.” These ingredients have, according to Hims & Hers Health, been “trusted by providers for decades to improve sexual health and lower cholesterol, respectively.”
This program could truly be a win-win if it gains traction. Hims & Hers Health would need to get healthcare providers on board, of course, but undoubtedly there’s a need for convenient preventive treatments in the area of men’s heart health. The press release didn’t specify the revenue-generating potential of the Heart Health by Hims program, but I can only imagine that it’s massive.
Hims & Hers Health Rallies and Then Falls on Quarterly Results
There’s an old saying in the financial markets: the first reaction is the wrong one. That looks like it was the case with HIMS stock in the wake of Hims & Hers Health’s second-quarter 2023 financial results announcement.
After watching Hims & Hers Health stock rise to $9 and then drop to $7.44 today, I scrambled to identify reasons for the sell-off. I’m still baffled, to be honest, as there’s nothing truly objectionable in Hims & Hers Health’s Q2 results or third-quarter outlook.
During the second quarter of 2023, Hims & Hers Health’s subscriber count grew 74% year-over-year to 1,300. Furthermore, the company’s net orders increased by 52% to 2,109. So far, Hims & Hers Health’s results look amazing, wouldn’t you agree?
In addition, Hims & Hers Health disclosed total quarterly revenue growth of 83% to $207.9 million. In large part, this can be attributed to Hims & Hers Health’s online revenue, which advanced 87% year-over-year during Q2 2023.
Then, we come to Hims & Hers Health’s earnings, which aren’t perfect but indicate improvement. As it turned out, Hims & Hers Health reported a second-quarter net loss of $7.2 million, which is much better than the $19.7 million net loss from the year-earlier quarter.
Looking to the current quarter, Hims & Hers Health expects to generate revenue in the range of $217 million to $222 million. This forecast implies modest growth compared to Hims & Hers Health’s Q2 revenue, so I don’t see a reason for financial traders to lose their cool over the company’s guidance.
Is HIMS Stock a Buy, According to Analysts?
On TipRanks, HIMS comes in as a Moderate Buy based on five Buys and three Hold ratings assigned by analysts in the past three months. The average Hims & Hers Health stock price target is $12.50, implying 65.8% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell HIMS stock, the most profitable analyst covering the stock (on a one-year timeframe) is Jack Wallace of Guggenheim, with an average return of 31.8% per rating and a 50% success rate. Click on the image below to learn more.
Conclusion: Should You Consider HIMS Stock?
Today, Hims & Hers Health stock was great for day traders but not so wonderful for long-term investors. Given Hims & Hers Health’s acceptable quarterly results and revenue outlook, it’s odd and unreasonable for traders to suddenly dump their shares.
Besides, Hims & Hers Health is making a bold and, hopefully, successful move into the high-need area of men’s preventive heart health treatments. All things considered, I am bullish on the stock while it’s still at a relatively low price.
