Hims & Hers: Mixed Q2 Results Signal Valuation Concerns

Hims & Hers stock (NASDAQ: HIMS) declined approximately 13% in extended trading following Q2 results that showed strong growth but missed revenue expectations. The company reported revenue of $544.8 million, representing a robust 73% year-over-year increase, but fell short of the $552 million consensus estimate.

The company’s profitability metrics showed significant improvement. Adjusted EBITDA reached $82 million, more than doubling from $39.3 million in the prior year quarter. This translated to earnings per share of $0.17, surpassing both the $0.15 consensus and the $0.06 reported in the year-ago period. Separately, see – UNH Stock To $160?

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HIMS continues to benefit substantially from compounded GLP-1 sales — cheaper, unapproved versions of popular diabetes and weight loss medications. While this revenue stream has driven impressive growth, it represents a key vulnerability for the business model.

The brief partnership with Novo Nordisk, which ended within months, highlighted the regulatory and competitive risks facing the company’s reliance on compounded alternatives. The sustainability of this strategy remains questionable as regulatory scrutiny increases and branded pharmaceutical companies potentially challenge the compounded market.

Despite the recent decline, HIMS trades at premium valuations that appears disconnected from broader market metrics:

• Price-to-Sales Ratio: 6.9x vs. 3.0x for the S&P 500
• Price-to-Free Cash Flow: 51.9x vs. 20.6x for the S&P 500
• Price-to-Earnings: 74.7x vs. 22.8x for the S&P 500

At current levels around $55, the stock remains above the average analyst price target of approximately $50, suggesting further downside risk even after recent declines. Also, see – Buy or Sell HIMS Stock?

While HIMS has demonstrated impressive revenue growth, several factors warrant caution. The company’s dependence on compounded medications creates regulatory uncertainty, and the valuation metrics suggest the stock remains expensive relative to both the broader market and analyst expectations.

The strong profitability improvements provide some support, but investors are paying a substantial premium for growth that may face headwinds if regulatory environments shift or branded competitors respond more aggressively to the compounded market. See, there always remains a meaningful risk when investing in a single, or just a handful, of stocks. Consider Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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