Morgan Stanley starts Hims & Hers at ‘overweight,’ on strong revenue growth

Investing.com -- Morgan Stanley initiated coverage of Hims Hers Health Inc (NYSE:HIMS ) with an “overweight” rating and a $42 price target driven by strong growth prospects and operating leverage.

“HIMS is well-positioned to capitalize on growing demand across multiple segments for personalized medication. We highlight the company's strong track record, deep and experienced Board and operating leverage in the model. Valuation is also attractive, especially on a growth adjusted basis,” analyst wrote.

The brokerage projects a 30% revenue CAGR from 2024 to 2026, following Hims’ 80% annual growth over the past three years. Morgan Stanley’s revenue and EBITDA estimates for 2025 are 5% and 9% ahead of consensus.

Morgan Stanley (NYSE:MS ) highlighted the company’s entry into compounded GLP-1 weight loss treatments, a significant growth driver. Hims introduced the offering in May 2024, gaining about 50,000 subscribers by Q3.

The brokerage estimates modest subscriber growth through 2027, reaching 1% of the market for GLP-1s.

Hims’ scalable platform boasts 80% gross margins, supported by an experienced leadership team with ties to Uber (NYSE:UBER ), Netflix (NASDAQ:NFLX ), Pfizer (NYSE:PFE ), and the FDA. Subscriber growth has surged, with a 175% year-over-year increase in Q3 2024.

While FDA-related news could keep the stock volatile, Morgan Stanley sees pullbacks as buying opportunities, given the long-term runway for growth.

Source: Investing.com