Diagnosis: Hims & Hers' August Price Dip Is an Opportunity to Buy

Key Points

• Hims & Hers' August price pullback is an opportunity to buy, but investors should wait for the market to bottom before betting big.
• Fundamentals remain strong despite the impact of GLP-1 sales and are driving value gains for investors.
• A pullback to critical support levels puts the stock at deep-value levels; the 30% short-interest suggests the rebound will be sharp when it happens.

Hims & Hers' NYSE: HIMS August price dip is an opportunity to buy, but investors shouldn’t rush to get into this healthcare stock. Forces in play, including high short interest and tepid analyst involvement, are capping gains in 2025 and setting this market up for correction. 

The question is how deep the correction will get and when the rebound will begin, and the answers are likely to be moderately deep and relatively soon. Regarding the targets for support, this market’s support is trending higher despite the 2025 volatility and is expected to step in and buy this stock in the $45 to $50 range.

Regarding the timing, the fall could be quick due to the 30% short interest and equally sharp on the uptick for the same reason. 

Hims & Hers' Stock Price Stumbles on Mixed Results

Hims & Hers' stock price dived into the Q2 results because of top-line weakness relative to the analysts' forecasts. The company brought in $544.8 million, falling short by $7.25 million based on the consensus reported by MarketBeat, but investors should focus on other metrics.

The primary is the 72.6% year-over-year (YOY) revenue growth driven by the increased client count and revenue per subscriber. 

Subscribers grew by 31%, compounded by a 30% increase in revenue per user, despite the impact of GLP-1 sales. Management cited strengths in other segments, offsetting the weakness, highlighting the strength of the diversifying business.

Segmentally, the core digital channel was strongest, up 75% YOY, offset by a 10% decline in the wholesale channel, a decline easy to overlook because of the small contribution to revenue. Wholesale is less than 1.5% of the business as of the end of Q2. 

Margin is an area of strength.

Higher costs and market challenges affected the company's margins, but it performed better than expected. The key takeaways are that net income increased by over 200%, GAAP earnings nearly doubled, and the full-year outlook remains unchanged.

Guidance includes an expectation for roughly $2.35 billion in revenue and an EBITDA margin near 11.5%, aligning with the analysts' consensus. This is good news for long-term investors, but there is no catalyst for a rally in August.

Hims & Hers Invests in the Future

His & Hers' guidance is compounded by plans to accelerate growth efforts. These include expanding products and services and an international expansion that is gaining traction. A recent acquisition gives the company a foothold in European markets as it expands into new specialties and more comprehensive, personalized healthcare. 

The impact of the investment is seen in the balance sheet highlights, which include increased liabilities and a tranche of convertible senior notes that were not present last year.

However, the increase in debt is small compared to the strength of the balance sheet; the company is now net cash, with rising equity and total liabilities of about 1.1x equity. This creates a flexible financial position that allows the business to invest in its future and create value for investors. 

Analysts Are Upbeat Following Hims & Hers Q2 Results

The analysts are upbeat about HIMS' outlook, with several notes highlighting strong fundamentals, profits, and expansion plans. However, the group did not rush to issue rating or price target changes, leaving the market extended and vulnerable to correction relative to the consensus targets.

As it is, the group rates the stock as a Reduce with a bearish bias and sees it falling around the $40 level. 

The technical action is best described as volatile. The market support is trending higher, but a top was reached in early 2025 that is acting as resistance in Q3. Resistance is near the $65 level and may remain strong until analysts' sentiment shifts.

Support is near the $45 to $50 level, aligning with July's 150-day EMA and price action. A move below that level is unexpected but possible. In that scenario, this market could fall to $40 or lower and provide a deep-value opportunity, with the stock trading below 10X its 2030 earnings forecast.