Hims and Hers (HIMS) PT Raised to $40 at Leerink Partners

Leerink Partners analyst Michael Cherny raised the price target on Hims and Hers (NYSE: HIMS) to $40.00 (from $24.00) while maintaining a Market Perform rating.

The analyst comments "With the semaglutide shortage effectively over, HIMS now should be in a position to drive fundamental price discovery based on its underlying growth more than broadbased speculation. The problem as we see it today is that the growth vectors have some ongoing questions, even if the headline outlook calls for ongoing robust growth. On the $725MM+ of weight management revenue guidance, the pacing of conversions as HIMS goes from primarily selling compounded semaglutide to a mix of orals/generic liraglutide/ some personalized semaglutide remains somewhat unclear. We could see a path for upside if the shortages restart or litigation postpones the shortage end, or we could see pressure if the market shifts back more to the brand drugs. Meanwhile, the rest of the business is guided to grow a robust 30%-plus level at the midpoint, but the underlying factors of that growth are seemingly hard to digest based on the implied 4Q core revenue growth being much lower than that. The increased personalization and multi-condition orders muddles it, but seeing how core growth shows upside has become harder to unpack. When you wrap it all together, we have a company that based on its long-term growth outlook but also its business model (which is still economically tied to selling prescription drugs in a techenabled/tech-efficient matter), we see 20-25x EV/EBITDA as a reasonable multiple range. This is based on what we know now and our current growth views, obviously subject to variation. We are increasing our PT from $24 to $40, with our target multiple up from ~20x CY25 EV/EBITDA to a rolled-forward 24x CY26 EV/ EBITDA. We still see a pathway to growth but also, now based much more on fundamentals, we don’t see reasonable upside from here. We thus reiterate our Market Perform rating."

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