Morgan Stanley Initiates Coverage of Hims Hers Health Inc

Morgan Stanley initiated coverage of Hims Hers Health Inc (NYSE:HIMS) with an “overweight” rating and a $42 price target, citing strong growth prospects and operating leverage.

> “HIMS is well-positioned to capitalize on growing demand across multiple segments for personalized medication. We highlight the company's strong track record, deep and experienced Board, and operating leverage in the model. Valuation is also attractive, especially on a growth-adjusted basis,” the analyst stated.

The brokerage forecasts a 30% revenue CAGR from 2024 to 2026, following Hims’ 80% annual growth over the past three years. Morgan Stanley’s revenue and EBITDA estimates for 2025 are 5% and 9% ahead of the consensus.

Morgan Stanley (NYSE:MS) pointed out the company’s entry into compounded GLP-1 weight loss treatments as a significant growth driver. Hims introduced this offering in May 2024, gaining approximately 50,000 subscribers by Q3.

The brokerage anticipates modest subscriber growth through 2027, predicting a reach of 1% of the market for GLP-1s.

Hims’ scalable platform features 80% gross margins, bolstered by an experienced leadership team with connections to Uber (NYSE:UBER), Netflix (NASDAQ:NFLX), Pfizer (NYSE:PFE), and the FDA. Subscriber growth has surged, with a 175% year-over-year increase in Q3 2024.

While FDA-related news could introduce volatility to the stock, Morgan Stanley views pullbacks as buying opportunities due to the long-term growth potential.