LifeMD stock price target lowered to $12 at KeyBanc on elevated costs

KeyBanc lowered its price target on LifeMD (NASDAQ:LFMD) to $12.00 from $14.00, while maintaining an Overweight rating, following the company's Q2 2025 earnings miss. The miss was primarily attributed to elevated customer acquisition costs in its RexMD segment and increased refund rates in the weight management business. Despite the negative market reaction to the earnings shortfall, KeyBanc expects RexMD to return to double-digit growth in the second half of 2025 as customer acquisition costs normalize and the company diversifies its treatment programs.

Analysis

LifeMD, Inc. (NASDAQ:LFMD) is navigating significant operational challenges, as reflected by KeyBanc's decision to lower its price target to $12.00 from $14.00, despite maintaining an Overweight rating. The catalyst for this revision was a Q2 2025 earnings report that missed analyst expectations on both revenue and per-share loss, triggering a negative market reaction. The shortfall was primarily attributed to elevated customer acquisition costs (CAC) in the RexMD business, which accounts for 40-50% of the company's telehealth revenue. A secondary headwind emerged from the weight management segment, which saw higher refund rates as patients opted for lower-cost alternatives to branded GLP-1 medications. Despite these near-term pressures, the company exhibits strong underlying fundamentals, including an impressive 87.6% gross profit margin and a 37.7% revenue growth rate over the last twelve months. KeyBanc's outlook remains constructive, predicated on the expectation that CAC is normalizing and that RexMD will return to double-digit growth in the second half of 2025, supported by strategic diversification into new treatment areas like hormone replacement therapy and peptides.

Key Decisions for Investors

• Investors should closely monitor customer acquisition costs in upcoming reports, as a sustained return to normal levels is critical to validating the bull case for a profit recovery in late 2025.
• Despite the recent stock price drop and earnings miss, the combination of a maintained Overweight rating, high gross margins, and strong revenue growth may appeal to investors with a higher risk tolerance looking for a potential turnaround story.
• The effectiveness of LifeMD's diversification strategy within its RexMD segment and its ability to navigate price sensitivity in the weight management market are key operational milestones to watch for a potential re-rating of the stock.
• Given the current trading price of $6.55 is significantly below KeyBanc's reduced $12.00 target, investors may consider the current valuation a potential entry point, while acknowledging the execution risks highlighted by the recent earnings report.