Hims & Hers vs. Amwell: Which Telehealth Stock Is the Better Buy?

A recent analysis compares telehealth stocks Hims & Hers (HIMS) and Amwell (AMWL), noting HIMS's outperformance in the past year with a 183% rally versus AMWL's 20.3% decline. While HIMS trades at a higher forward price-to-sales ratio, analysts project a 166.7% improvement in HIMS's 2025 EPS, compared to a 49.7% improvement in AMWL's loss per share; despite a projected price target decline for HIMS, the analysis suggests HIMS is a more stable investment due to its profitability, margins, and free cash flow, rating it a Zacks Rank #2 (Buy) versus AMWL's Zacks Rank #3 (Hold).

Analysis

The telehealth sector features Hims & Hers Health, Inc. (HIMS) and American Well Corporation (AMWL) as key innovators with distinct operational models. HIMS has demonstrated significant market outperformance, with its stock rallying 183% over the past year, contrasting sharply with AMWL's 20.3% decline. Valuation metrics present a mixed picture: HIMS trades at a forward price-to-sales (P/S) ratio of 4.6X, above its historical median of 2.3X and the medical sector average of 2.4X, indicating a premium valuation. Conversely, AMWL's forward P/S is 0.4X, below its 1.3X median, suggesting potential undervaluation. HIMS is focused on a consumer-first approach, rapidly expanding into new specialty treatments like sleep disorders and hypertension, and recently collaborated with Novo Nordisk for obesity care, including offering Wegovy access. Its MedMatch AI tool supports personalized treatment, with over 65% of new 2024 subscribers receiving personalized products. Zacks Consensus Estimate projects a 166.7% EPS improvement for HIMS in 2025. Amwell, focusing on an enterprise model, enables healthcare providers with its Converge platform, which boasts EHR interoperability and supports diverse care modalities. Amwell is also advancing its Military Health System solution with Leidos and has partnerships with Cleveland Clinic and Hello Heart. Its 2025 loss per share is projected to improve by 49.7%. Despite analyst average price targets suggesting a 17.9% decline for HIMS (target $43.00) and a 44.7% increase for AMWL (target $10.00), the article favors HIMS, a Zacks Rank #2 (Buy), citing its strong profitability, margins, free cash flow generation, and lower execution risk. Amwell holds a Zacks Rank #3 (Hold).

Key Decisions for Investors

• Investors may find Hims & Hers a compelling opportunity due to its strong financial performance, robust growth in user engagement, and capital-efficient model, despite its premium valuation and analyst price targets indicating potential short-term downside.
• Amwell could be considered by investors with a higher risk appetite, attracted by its lower valuation and significant upside potential suggested by analyst price targets, while acknowledging its ongoing efforts to improve financial metrics and its current Zacks Hold rating.
• It is advisable to monitor HIMS's ability to sustain its growth and profitability to justify its valuation, and to track AMWL's progress in scaling its enterprise solutions and achieving cost alignment and improved revenue quality.