Shares of Hims & Hers Health (NYSE: HIMS) rocketed 23% higher this week. The telehealth platform that is focused on making getting treatment affordable and streamlined seems to still be riding high on its recent announcement of adding weight loss drugs to its product portfolio.
The stock is up 55% in the past month and over 117% in the last 12 months.
Betting on weight loss drugs
On May 20, Hims & Hers announced it would be launching its own branded GLP-1 medicines. These are the revolutionary weight loss drugs that have been taking the globe by storm, due to the fact they are apparently effective in getting people to lose weight. However, Hims & Hers’ are coming to the market at a relatively cheap price of $199 a month compared to the $1,000 current patients of GLP-1 products might be paying.
These type of disruptive prices are what has made the company grow in popularity in recent years with other forms of drugs. It now wants to replicate this success with its weight loss portfolio. By 2025, management is expecting the weight loss division to hit $100 million in revenue.
Innovative products and go-to-market strategies have driven Hims & Hers revenue higher in recent years. Over the last 12 months, the company generated $959 million in sales. In 2021, it was doing less than $250 million in sales. That is some impressive growth that likely has investors excited as the company looks to disrupt a part of the stodgy healthcare market.
Fast growth, but is the stock a buy?
Hims & Hers is growing quickly, posting 46% year-over-year revenue growth last quarter. With only 1.7 million subscribers on its platform, it has the potential to become much bigger in the coming years if it can convince more and more American consumers to come on board.
The stock has a price-to-sales (P/S) ratio of 4.3 with gross margin above 82%. Combine this with fast revenue growth and Hims & Hers stock could be mightily undervalued for investors who plan to hold on for the long term. As long as the company can turn that high gross margin into bottom-line earnings, the stock looks like a good bet for investors at these prices.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Hims & Hers Health Stock Soared This Week: Here’s Why was originally published by The Motley Fool
From: Yahoo.com
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