How HIMS Stock Rises To $120?

Core Insights - Hims & Hers Health (NYSE: HIMS) stock surged by 16% following the announcement of its expansion into menopause and perimenopause treatment, indicating a strategic shift to diversify revenue sources beyond its GLP-1 obesity treatments [2][3] - The stock has increased by 150% year-to-date, currently trading around $60, raising the question of whether it could double to $120 [2][3] - The valuation appears conservative at 7.6x trailing revenues compared to other high-growth healthcare companies, which typically range from 12-15x [3] Revenue Growth Potential - Hims & Hers reported $2.0 billion in trailing twelve-month revenue, an 88.7% increase from $1.1 billion, with the latest quarter showing $545 million in sales, a 72.6% increase from $316 million [4] - Analysts project 58% growth this year and 20% next year, but these estimates were made before the menopause launch; a compound annual growth rate of 25%-30% over the next three years could lead to $4 billion in revenue by 2028 [5][6] Market Valuation and Multiples - If revenue reaches $4 billion while the stock remains at $60, it would imply a low valuation of 3.8x sales, making HIMS one of the least expensive growth narratives in healthcare [6] - A more plausible scenario suggests a revenue multiple of around 6x, leading to a market capitalization of $24 billion and a share price above $100, even with a decrease in the multiple [7][16] Strategic Diversification - The menopause launch addresses over-dependence on GLP-1s and targets an underserved market, potentially generating $500-750 million in annual revenue within 2-3 years [11][12] - Hims & Hers has built a telehealth platform that allows for effective cross-selling, reducing customer acquisition costs as new sectors are introduced [13] Profitability and Market Sentiment - The market is currently hesitant to grant Hims a premium revenue multiple until sustained profitability improvements are demonstrated [10] - The company is investing heavily in customer acquisition and infrastructure, which may lead to improved margins as growth continues [20] Risks and Market Dynamics - Regulatory scrutiny from the FDA regarding compounded GLP-1s poses a significant risk, as any intervention could drastically impact revenue [20][21] - Increased competition in telehealth and compounded medications could pressure margins and growth [21] - A broader market shift away from growth stocks due to economic factors could compress multiples, affecting Hims regardless of its fundamentals [21]