Digital health companies are still a growing pocket within the broader U.S. healthcare industry, years after the initial COVID-19 outbreak first drove patients and their doctors online. According to a report by Fortune Business Insights, the global digital healthcare market is estimated to grow at a CAGR of 23.3% through 2030, ultimately reaching a market size of nearly $2 trillion by the end of this decade.
One company that has tapped into this burgeoning market in a big way is Hims & Hers Health (HIMS), which has more than tripled in value over the past two years. After the stock's big breakout rally, here's how much higher Wall Street analysts think HIMS can climb.
Hims & Hers Stock Spikes Higher
Hims & Hers Health Inc. (HIMS) is a San Francisco-based telehealth company selling prescription and over-the-counter drugs. They specialize in conditions relating to sexual health, mental health, dermatology, and general wellness. Founded in 2017, the telehealth company went public via a SPAC listing in early 2021.
Shares of Hims & Hers have spiked this year, up 74.7% YTD. In the past six months, HIMS has popped nearly 145%, and earlier in today's session the stock set a new 52-week high of $15.60.
This rally is linked in large part to the company's strong forecast for the year. Hims & Hers announced their Q4 results in February, with revenue of $246.6 million up 47% year-over-year to beat Wall Street's estimates. Likewise, the company booked a small profit of $0.01 per share, which also surpassed estimates for a quarterly loss. Adjusted EBITDA rose to $20.6 million for the quarter, while subscribers grew 48% to 1.5 million.
On a full-year basis, the company’s 2023 revenue grew to $872.0 million, up from $529.92 million in the prior year, while the full-year net loss narrowed to $23.5 million from $65.7 million in 2022.
Investors also cheered a stronger-than-expected forecast for the current quarter and full fiscal year. HIMS anticipates revenue in the range of $267 million-$272 million for Q1, well beyond the consensus estimate of $252.84 million. For the full year, management's revenue guidance range was $1.17 billion-$1.2 billion, higher than the estimated $1.1 billion.
Following the results, HIMS stock spiked 31% in a single session. Since then, the shares have not only held onto their earnings-related gains, but extended the rally, and are now up more than 50% from their pre-earnings closing price.
Is HIMS Still a Buy?
With this small-cap Russell 2000 Index (RUT) component stock up 60% in the past year, and trading near record highs, is there more room for growth?
Among the 12 analysts covering HIMS, 6 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 5 have a “Hold” rating.
Although the stock is trading above its mean price target of $14.33 from analysts, the most bullish forecasts call for HIMS to rise to $17 per share - a premium of about 9% from current levels.
That Street-high target belongs to Guggenheim's Jack Wallace, who wrote, “We are incrementally more positive on HIMS after a solid 4Q print and even better outlook given by management,” in a note accompanying the Feb. 28 price-target hike.
