Truist Securities maintains Hims and Hers stock rating with $45 target

Truist Securities reaffirmed its Hold rating on Hims & Hers (HIMS) with a $45 price target following the company's acquisition of ZAVA, a UK-based telehealth company, which is projected to contribute approximately 2% to 2025 revenue; the acquisition, funded in part by a recent $1 billion note raise, expands Hims & Hers' international presence and offers cross-selling opportunities, though Citi and BofA Securities maintain Sell/Underperform ratings citing integration risks and order growth slowdown, while Hims & Hers also introduced a promotional Wegovy pricing option.

Analysis

Truist Securities has reaffirmed its Hold rating on Hims and Hers (NYSE:HIMS) with a $45 price target, even as the stock trades at $58.69, a level InvestingPro analysis suggests is overvalued for the $12.82 billion market cap company. This assessment follows Hims and Hers' recent acquisition of ZAVA, a UK-based direct-to-consumer telehealth firm, a strategic move to expand internationally into markets including the UK, Germany, France, and Ireland, with ZAVA expected to add approximately 2% to 2025 revenues according to Truist. Hims and Hers, which has demonstrated an 86% revenue growth over the last twelve months and maintains moderate debt levels, recently fortified its financial position by raising $1 billion in principal notes in May, supporting this acquisition and potentially future M&A. The ZAVA deal provides access to 1.3 million active consumers, offering cross-selling opportunities against Hims and Hers' 2.366 million Q1 2025 active subscribers, and is anticipated to positively impact financials by 2026. However, this expansionary phase is met with caution from other analysts: Citi reiterated a Sell rating, Leerink Partners a Market Perform, and BofA Securities an Underperform, all citing concerns such as ZAVA integration challenges, a potential slowdown in order growth, and risks tied to international expansion. Alongside M&A, Hims and Hers launched a promotional Wegovy® pricing at $549 per month for new customers until June 30, 2025, to broaden access to obesity treatments and capture market share.

Key Decisions for Investors

• Investors should consider the notable discrepancy between HIMS's current stock price of $58.69 and Truist's $45 target, alongside InvestingPro's overvaluation signal and the more bearish stances from Citi and BofA Securities.
• Key areas for scrutiny include the successful integration of ZAVA, its actual contribution to revenue and subscriber growth compared to projections, and the management of associated international expansion risks and order growth slowdown concerns highlighted by analysts.
• Monitoring HIMS's organic order growth trends and the market traction of new initiatives, such as the promotional Wegovy pricing, will be critical in assessing the sustainability of its high growth trajectory, especially given the company's stated capacity for further acquisitions.