HIMS Stock: What Comes After the Nine-Fold Jump?

The stock price of Hims & Hers Health (NYSE: HIMS), a telehealth platform, has risen a stellar 43% in a week. Much of this move came after the company’s controversial Super Bowl commercial generated widespread attention following Sunday’s broadcast. The commercial depicted America’s obesity crisis as a manipulated system, suggesting that high costs and healthcare industry practices prevent people from accessing necessary weight-loss drugs.

Hims & Hers offers a compounded formulation of semaglutide, which contains the same active component found in obesity treatments manufactured by Novo Nordisk. HIMS stock has been on a tear, surging a gigantic nine-fold from levels of around $7 in early 2022 to around $60 now. This can primarily be attributed to:

1. a 357% rise in the company’s revenue from $272 million in 2021 to $1.2 billion now;
2. a 141% jump in the company’s P/S ratio to 10.9x now, versus 4.5x in 2021; partly offset by
3. a 22% rise in total shares outstanding to 228 million.

While HIMS stock has had a phenomenal run, if you want an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Image by Markus Winkler from Pixabay

Hims and Hers is an online platform that connects patients with licensed healthcare professionals and offers treatments for a range of conditions, including hair loss and sexual wellness, among others. Hims & Hers revenue comprises retail and wholesale sales, with retail accounting for 97% of the company’s total sales. The rise in the company’s revenue can be attributed to the surge in demand for GLP-1 drugs for weight-loss.

While the likes of Zepbound were in short supply lately, Hims & Hers benefited from selling the compounded versions of weight loss drugs. Wegovy and Zepbound are both priced above $1,000 for a four-week dosage, while the compounded version from Hims & Hers is available for $165. Now, the compounded version isn’t FDA approved. Though Eli Lilly’s Mounjaro and Zepbound are no longer in short supply according to the FDA, Novo Nordisk’s Ozempic and Wegovy remain on the shortage list, enabling ongoing compounding of these medications.

The total subscribers on Hims & Hers platform have nearly quadrupled from 0.5 million in 2021 to over 2 million now. Also, the average revenue per average subscriber has improved from $51 to $60 over the same period. The company has expanded its offerings lately, bolstering its subscriber growth.

Looking at profitability, the company’s operating loss stood at $29 million in 2023, versus $115 million in 2021. However, for the last twelve-month period, it has reported operating income of $43 million. The operating income margin has improved from -42.3% in 2021 to 3.5% now. The company will release its full-year results later this month.

Despite HIMS shares delivering impressive returns that have surpassed major market benchmarks, the stock’s journey has been marked by significant price swings. Returns for the stock were -55% in 2021, -2% in 2022, 39% in 2023, and 172% in 2024. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

The current momentum for HIMS stock appears to be driven by optimism around continued compounding opportunities. While Hims & Hers’ emphasis on customized treatments that minimize side effects may enable continued compounding operations beyond the shortage period, their addressable market is likely to contract once these medications become readily available through traditional channels. Due to the prevailing uncertainties, it’s difficult for investors to maintain a long-term perspective on HIMS stock. Notably, the average analyst price target of $26 represents a substantial discount of over 55% from the current price of $60.

While HIMS stock looks like it is overvalued, it is helpful to see valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 2/14/2025
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.