Potential for HIMS Stock to Surpass Previous 100% Growth Threshold Again?
Hims & Hers Health (HIMS) stock could see a surge, but it's a risky bet. The stock has skyrocketed 110% since the beginning of the year, mainly due to its affordable compounded weight loss medications and acquisition of Trybe Labs for at-home testing services. However, its current price of around $66 makes it a tricky pick, as it's extremely high compared to its operating performance over the years.
Despite the attractive value, HIMS stock is highly volatile, making it a challenge to buy at this price point. Our analysis of the company's performance in key areas such as Growth, Profitability, Financial Stability, and Downturn Resilience reveals a strong operating performance and financial condition.
Looking at the stock's valuation, HIMS seems quite expensive compared to the S&P 500. It has a price-to-sales (P/S) ratio of 6.5, far higher than the S&P 500's 3.1. Similarly, its price-to-operating income (P/EBIT) and price-to-earnings (P/E) ratios stand at 188.2 and 43.3, respectively, versus the S&P 500's 24.4 in both cases.
However, HIMS's revenue growth has been considerable over the last few years. It has seen its top line grow at an average rate of 80.7% over the last three years, with revenues increasing by 56.7% from $793 million to $1.2 billion in the last 12 months. Its quarterly revenues also grew by 77.1% in the most recent period.
When it comes to profitability, HIMS's operating income and operating cash flow (OCF) ratios are relatively poor compared to the S&P 500. However, its balance sheet looks very strong, with a highly favorable Debt-to-Equity Ratio of 0.1% and a robust Cash-to-Assets Ratio of 42.2%.
HIMS has shown resilience during downturns, performing slightly better than the S&P 500 index during the Covid recession. Although its returns were not as impressive as those of Trefis's High Quality (HQ) Portfolio, HIMS still managed to regain its losses more quickly.
In summary, while HIMS's financial performance is strong, its valuation is quite high. It's a risky pick, but for investors with a tolerance for volatility and a belief in the company's long-term growth potential, it could be an attractive option.
- Novo Nordisk, a major player in the obesity and diabetes treatment sector, might consider integrating Hims & Hers' affordable weight-loss offerings into its services, given Hims's significant revenue growth.
- Trybe Labs, a subsidiary of Hims & Hers, offers at-home testing services, which could help in early detection and management of weight-related health issues, like obesity and diabetes.
- The impressive revenue growth of Hims & Hers, including a 56.7% increase in the last 12 months, has contributed to its market valuation, making it difficult for investors to buy stocks at its current $66 price point.
- Despite the higher-than-average P/S, P/EBIT, and P/E ratios of Hims & Hers compared to the S&P 500, the company's strong balance sheet and debt management policies support its stock's potential value.
- Hims & Hers has performed better than the S&P 500 index during the Covid-19 recession, indicating its resilience in challenging economic conditions, including those related to obesity and diabetes.
- Stock investors looking for high-growth potential in the obesity and diabetes treatment market might find Hims & Hers an appealing choice given its revenue growth and at-home testing services via Trybe Labs, despite its currently high valuation.
