Morgan Stanley Starts Hims and Hers (HIMS) at Overweight

Morgan Stanley analyst Craig Hettenbach initiates coverage on Hims and Hers (NYSE: HIMS) with a Overweight rating and a price target of $42.00.

The analyst comments "Initiating coverage of HIMS with an Overweight rating and $42 PT. We view HIMS as a compelling compounding investment, no pun intended. We estimate a revenue CAGR of 30% from 2024-2026, building on very strong growth of 80% per annum in the last 3 years. The company has established itself with one of the stronger track records ( Exhibit 3 , Exhibit 4 , Exhibit 5 ) spanning the domains of digital health and DTC and we look for management to build on this success. Our revenue and EBITDA estimates are 5% and 9% ahead of the Street for 2025 ( Exhibit 1 ). Hims & Hers has a scalable technology platform, where we highlight 80% gross margin and executives/Board Members that have had senior leadership roles at successful platforms such Uber, Netflix, DoorDash and Tinder. This is complimented by executives/Board Members bringing domain expertise in healthcare, including the former deputy commisioner at the FDA, executives at leading drug companies such as Novo Nordisk, Pfizer, Teva and a senior advisor for the Cleveland Clinic. Under the guidance of experienced operators, we think the company is at a tipping point in personalization, where subscribers increased 175% y/y in Q3’24 compared to 44% for the entire business. Our PT of $42 is based on an EV/S multiple of 3.5X on CY26, in line with the current multiple on next twelve months. On a growth adjusted basis, the EV/S/G multiple of 0.12X is attractive relative to DTC Internet/Digital Health stocks of 0.36X and SMID cap software at 0.42X. Alternatively, our PT reflects an EV/EBITDA multiple of 24X. In contemplating elevated volatility in the stock, we highlight a wide range between our Bull and Bear cases with an attractive skew of nearly 2.5:1."

For an analyst ratings summary and ratings history on Hims and Hers click here. For more ratings news on Hims and Hers click here.

Shares of Hims and Hers closed at $31.25 yesterday.

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