BofA says Hims & Hers could crash another 49%

Shares of Hims & Hers (HIMS) tumbled this week after the telehealth firm missed revenue expectations, and Bank of America says the worst may not be over.

At first glance, the company’s second-quarter results looked like a win: revenue jumped 73% year-over-year to $544.8 million, and adjusted earnings more than doubled to $82 million, up from $39.3 million a year ago.

“We're seeing consistent growth across our business as we continue to democratize access to precision care,” CFO Yemi Okupe said in the company’s earnings release.

But under the surface, some numbers raised red flags.

Revenue was down from $586 million in the first quarter and came in below Wall Street’s $552 million forecast. More importantly, Hims had previously guided full-year revenue between $2.3 billion and $2.4 billion.

To meet even the midpoint of that range, it would need to pull in roughly $610 million per quarter for the rest of the year, a tall order given the current trajectory.

Its $266 million acquisition of European telehealth platform Zava isn’t expected to close that gap. The company said Zava would contribute around $50 million in revenue during the second half.

“The fact is, the core business is slowing badly, and the phony GLP-1 personalization scheme is the only thing keeping this company's stock on two feet,” wrote biotech analyst Adam May on X, referencing Hims’ push into weight loss drugs like Ozempic.

BofA analysts had the same concern, pointing to a 17.4% sequential decline in sales of weight-loss products, which is a critical category for the company’s growth narrative.

Bank of America reaffirmed its bearish stance, keeping its $28 price target, implying nearly 50% downside from current levels.

Is HIMS stock still too expensive?

Shares of HIMS are down 10% since the report, trading around $55. But even after the recent pullback from its peak near $73, the stock still looks expensive.

Over the past year, it’s gained 210%, which a blistering run that now looks out of step with the fundamentals. At a price-to-earnings ratio of 80x, the stock leaves little margin for error.

The thing is, there are a lot of opportunities to disappoint ahead. Bank of America’s team sees slowing core business growth, overreliance on GLP-1s, and fading weight-loss momentum as red flags.

If Hims & Hers fail to deliver, BofA says HIMS’ steep valuation may be in for a rest.