Earnings Release: Here's Why Analysts Cut Their Hims & Hers Health, Inc. (NYSE:HIMS) Price Target To US$15.50

By
Simply Wall St
Published
May 19, 2021
NYSE:HIMS
Source: Shutterstock

It's been a pretty great week for Hims & Hers Health, Inc. (NYSE:HIMS) shareholders, with its shares surging 18% to US$10.56 in the week since its latest first-quarter results. Revenues of US$52m beat expectations by a respectable 7.4%, although statutory losses per share increased. Hims & Hers Health lost US$0.34, which was 127% more than what the analysts had included in their models. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Hims & Hers Health

earnings-and-revenue-growth
NYSE:HIMS Earnings and Revenue Growth May 20th 2021

Following the latest results, Hims & Hers Health's three analysts are now forecasting revenues of US$202.6m in 2021. This would be a sizeable 36% improvement in sales compared to the last 12 months. Losses are forecast to balloon 90% to US$0.44 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$202.0m and losses of US$0.44 per share in 2021.

The analysts trimmed their valuations, with the average price target falling 21% to US$15.50, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Hims & Hers Health, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$12.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Hims & Hers Health's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 51% growth on an annualised basis. This is compared to a historical growth rate of 80% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.0% per year. Even after the forecast slowdown in growth, it seems obvious that Hims & Hers Health is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Hims & Hers Health's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Hims & Hers Health analysts - going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Hims & Hers Health that you need to be mindful of.

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