Hims & Hers Well being (NYSE:HIMS) is positioning itself to capitalize on Novo Nordisk’s (NYSE:NVO) mounting struggles within the weight reduction market, because the Danish pharmaceutical large wrestles with declining gross sales and a CEO change.
Novo Nordisk terminated its collaboration with Hims & Hers in Could, accusing the telehealth firm of “unlawful mass compounding” and “misleading advertising” of its weight reduction remedies. The pharma large claimed Hims & Hers failed to stick to legal guidelines prohibiting mass gross sales of compounded medicine underneath the “false guise of personalization.”
Notably, Hims & Hers seems unfazed by the accusations. In its second-quarter (Q2) earnings name, HIMS maintained confidence in its weight reduction specialty, anticipating to ship at the very least US$725 million in income this 12 months throughout its complete choices, together with oral remedies and customized compounded GLP-1s.
Alternatively, Novo Nordisk not too long ago slashed its full-year steerage, citing weaker progress expectations for Wegovy within the U.S. market. The healthcare heavyweight now expects gross sales progress of simply 8% to 14%, down from a earlier goal of 13% to 21%.
“For Wegovy within the U.S., the gross sales outlook displays the persistent use of compounded GLP-1s, slower-than-expected market growth and competitors,” Novo Nordisk said, basically acknowledging that firms like Hims & Hers are consuming into its market share.
Is HIMS inventory a superb purchase proper now?
In the course of the Q2 earnings name, Hims & Hers CEO Andrew Dudum emphasised that the platform prioritizes “safety of customers’ curiosity” and ensures suppliers keep “full independence in decision-making.” It reported serving over 2.4 million subscribers, with robust retention charges in its weight reduction applications.
As Novo Nordisk struggles with disappointing trial outcomes for its next-generation weight problems drug and battles destructive sentiment that has pushed its inventory down over 42% this 12 months, Hims & Hers is increasing internationally and launching new specialties like hormonal well being.
The Danish large’s troubles might present a possibility for the telehealth disruptor to ascertain itself as a viable different within the profitable weight administration market.
Hims & Hers demonstrated robust monetary momentum with 73% year-over-year income progress to US$545 million in Q2, whereas sustaining wholesome adjusted earnings earlier than curiosity, tax, depreciation, and amortization margins above 15%.
The corporate’s subscriber base grew to 2.4 million, with robust retention charges, as solely 25% of weight reduction clients discontinued therapy at six months in comparison with 80% in some public research.
HIMS is launching hormonal well being remedies for over 50 million Individuals coping with low testosterone and menopause signs. A key strategic transfer entails buying a blood testing lab to supply complete at-home testing, making a standalone income stream whereas supporting preventive care initiatives.
What’s the HIMS inventory value goal?
Analysts monitoring HIMS inventory forecast gross sales to rise from US$1.48 billion in 2024 to US$3.8 billion in 2029. Comparatively, adjusted earnings are forecast to increase from US$0.95 per share to US$3.03 per share on this interval.
Immediately, HIMS inventory is priced at 36 occasions ahead earnings, which is affordable given its progress estimates. If it could actually keep the same valuation, HIMS inventory may greater than double over the subsequent three years.
Analysts stay bullish and forecast HIMS inventory to achieve 15% over the subsequent 12 months, given consensus value targets.
