Shares of Hims & Hers Health (HIMS) rose over 2% in pre-market trading on Monday, rebounding slightly after a steep 9% drop on Friday. Despite the early gains, the stock has declined by more than 10% over the past five trading days, leaving investors curious about the factors driving its pre-market recovery.
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For context, Hims & Hers Health provides accessible healthcare products and services, including prescription medications, wellness products, and online medical consultations.
What’s Behind the Recent Plunge in HIMS Stock?
HIMS recently plunged as markets reacted cautiously to a major C-suite change. After the market closed on Thursday, Hims & Hers announced in a regulatory filing that COO Nader Kabbani has stepped down. He will transition to a new advisory role, providing ongoing strategic guidance and supporting special global initiatives through next July.
Mike Chi, currently the Chief Commercial Officer, will take over as COO. According to the company, Chi appears to be a capable leader to fill the role. Investors typically value stability and longevity in executive positions, which led to a negative market reaction on Friday.
However, confidence is returning, and HIMS is rising in pre-market trading as investors show renewed interest in the stock.
Wall Street Remains Cautious
Investor sentiment was further dampened by a Sell rating on HIMS stock. Last week, four-star-rated analyst Allen Lutz at Bank of America Securities reiterated his Sell rating on HIMS stock, predicting a downside of 47%. Lutz noted that the company is struggling to meet Q3 sales expectations, with weaker order growth raising concerns for upcoming quarters. He added that rising customer acquisition costs, increased competition, and recent FDA reforms could further pressure margins.
He also noted that while Hims & Hers remains strong versus peers, these challenges may require cutting ad spend or could squeeze profits, supporting a cautious outlook and Sell rating.
Is HIMS a Good Stock to Buy?
Overall, Wall Street analysts have a Hold consensus rating on HIMS stock based on two Buys, seven Holds, and two Sells assigned in the last three months. The average HIMS stock price target of $49.0 implies a downside of almost 7% from the current trading level.
