hims stock: What to expect

Hims & Hers Health (HIMS) is set to report earnings this Monday, and the numbers are painting a picture that's…well, let's just say it's more nuanced than their marketing suggests. Analysts are expecting a 44.3% year-on-year revenue increase for Q3, landing at $579.6 million. Now, on the surface, that sounds pretty good, right? Except, it's a noticeable deceleration from the 77.1% jump we saw in the same quarter last year. That's a significant drop-off.

Is the Hype Fading?

The question is, is this just a natural consequence of scaling, or are we seeing the first signs of the hype bubble bursting? Last quarter, Hims & Hers missed revenue expectations by 1.1%, clocking in at $544.8 million. While that's still a hefty 72.6% year-on-year growth, it's another data point suggesting a potential trend. They've only missed revenue estimates once in the past two years (exceeding expectations by an average of 3%), so this recent miss raises an eyebrow. According to Hims & Hers Health (HIMS) Q3 Earnings: What To Expect - TradingView, analysts are closely watching these figures.

And it’s not just revenue. Last quarter also saw them beat EPS estimates but significantly whiff on EBITDA guidance for the next quarter. This discrepancy—strong current performance, weak forward guidance—suggests internal uncertainty, or at least a degree of caution, about future growth. Are they sandbagging expectations to make future beats look even better? It's a classic corporate tactic, but it doesn't always fool the market.

They did add 73,000 customers last quarter, bringing their total to 2.44 million. Customer acquisition is still happening, but is it happening efficiently? What's the customer acquisition cost (CAC), and is it trending upwards? Details on CAC remain scarce, but a rising CAC coupled with slowing revenue growth would be a red flag. I've looked at hundreds of these filings, and the lack of transparency around customer acquisition cost is something that I find genuinely puzzling.

Healthcare Tech: A Mixed Bag

The broader healthcare technology sector isn’t exactly offering a clear signal either. HIMS stock is down 11.8% over the last month, reflecting some investor unease. On the other hand, Omnicell, a peer in the space, recently beat revenue estimates by 5% with 10% year-on-year sales growth, sending their stock up 13.6%. This highlights the specific challenges or opportunities facing Hims & Hers, rather than a sector-wide trend.

Analysts, bless their optimistic hearts, still have an average price target of $47.77 for Hims & Hers, slightly above the current share price of $46.35. But analyst targets are often lagging indicators, reflecting past performance more than future prospects. The fact that they've largely reaffirmed their estimates over the last 30 days doesn't necessarily inspire confidence; it suggests they may be slow to react to changing realities.

The flat share prices in the healthcare technology segment over the last month suggest investors are in a holding pattern, waiting to see how these earnings reports shake out. It's like a poker game where everyone's playing tight, waiting for someone to blink.

Time to Reassess the Dosage?

So, what's the takeaway? Hims & Hers is facing a potential inflection point. The high-growth narrative that fueled its initial ascent is starting to show cracks. The question now is whether they can adapt, innovate, and find new avenues for growth, or whether they'll become just another flash-in-the-pan telehealth company. They need to demonstrate that they're more than just a purveyor of convenient prescriptions; they need to build a sustainable, differentiated business model. Otherwise, the stock could be headed for a correction—a rather painful one.

The Growth Narrative Is Looking a Little Pale