Hims & Hers: The Growth Narrative Faces a Reality Check

Hims & Hers US4330001060

Once a celebrated growth story in the telehealth sector, Hims & Hers Health is now confronting significant headwinds. The company's shares, trading well below their previous highs, are under pressure as analysts question its future trajectory. A recent assessment by Morgan Stanley has cast a spotlight on the challenges eroding the company's once-bright prospects.

The core issue identified by analysts is a dramatic projected slowdown in revenue expansion. For the first quarter of 2025, the company reported a surge of 111 percent. However, forecasts for 2026 anticipate growth of just 17 percent. This deceleration is attributed primarily to softer performance in its men's health business and intensifying price competition within its core service segments. Furthermore, changes to subscription models are creating greater revenue unpredictability, adding to market unease.

Morgan Stanley maintained its "Equalweight" rating on the stock but highlighted these mounting risk factors, contributing to the downward trend in its share price.

Lofty Valuation Meets Insider Selling Activity

Despite a substantial correction—the stock currently trades more than 50 percent below its 52-week high—its valuation remains elevated. Shares command an estimated price-to-earnings (P/E) ratio above 54, nearly double the industry average. The stock's PEG ratio (Price/Earnings to Growth) of 5.16 also sits significantly above the sector median of 2.27.

This rich valuation appears to have coincided with insider selling. Over the past 90 days, company insiders disposed of shares worth approximately $4.9 million, with executives making notable reductions in their holdings during December alone. In a contrasting move, the board authorized a $250 million share repurchase program in November, an attempt by management to express confidence in its long-term strategy.

Technical and Analyst Sentiment Reflect Concerns

The technical picture reinforces the negative sentiment. The current share price of $30.52 sits below both the 50- and 200-day moving averages, confirming the prevailing downtrend. Since the start of the year, the stock has declined over 8 percent.

Wall Street opinions are divided on the path forward. While some analysts, such as those at Barclays, see potential and maintain price targets above $40, the consensus rating from Zacks currently labels the stock a "sell." All eyes are now on the upcoming quarterly report. Analysts project revenue will rise to around $620 million, but they simultaneously anticipate a significant year-over-year decline in earnings per share. This report is seen as a critical test for the company's evolving story.