We came across a bullish thesis on Hims & Hers Health, Inc. (HIMS) on Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on HIMS. Hims & Hers Health, Inc. (HIMS)’s share was trading at $29.81 as of Jan 21st. HIMS’s trailing and forward P/E were 67.75 and 61.35 respectively according to Yahoo Finance.
A nurse in a telehealth platform talking with a patient on video call for consultation.
Hims is a rapidly growing company in the healthcare space that, despite its current valuation at approximately $6 billion, holds significant potential for long-term growth. With revenue growing at an impressive rate, Hims trades at just below five times sales, well below its fair value range of eight to ten times sales. The company’s growth trajectory is similar to companies like Palantir, but what sets Hims apart is its business model, which is still in its early stages. The company’s potential for substantial future growth is fueled by its ability to solve a wide range of acute customer problems through personalized healthcare solutions. This is reflected in the increasing convergence of its revenue and net income, demonstrating strong operational execution.
What makes Hims stand out is its business philosophy and operational capabilities. At its core, Hims is an incredibly efficient organization focused on maximizing outputs while minimizing inputs. This ability to deploy new personalized healthcare verticals rapidly is a key driver behind its growth. Each new vertical adds to its already impressive customer base, making it increasingly difficult for competitors to replicate its operations. The company’s growing number of subscribers on personalized plans is a clear indicator of this success. In addition to solving a range of patient issues, Hims operates outside the traditional healthcare insurance system, allowing it to offer better outcomes per dollar invested compared to the incumbents.
Hims’ management team has shown exceptional capital allocation skills, which have played a key role in deploying new verticals while also building necessary infrastructure. This ability to innovate while maintaining financial health positions the company for long-term success. The company’s success is not a fluke; it is the result of a world-class management team and a robust company culture, which has allowed Hims to achieve positive cash flow while executing a complex and evolving business strategy. The management’s track record of capital efficiency gives confidence that the company will continue to grow and succeed in a highly competitive industry.
Currently, Hims operates in a $4 trillion healthcare industry, and its cost-effective approach, focusing on better patient outcomes and a digital-first strategy, gives it a distinct competitive advantage. Hims’ exclusive focus on healthcare, coupled with its operational efficiency, makes it well-positioned to grow significantly, both domestically and internationally. With the potential to scale 50 to 100 times its current size, the company’s future growth prospects are enormous. The market’s current valuation does not fully reflect the company’s operational strength and growth potential, offering a compelling opportunity for long-term investors. By 2030, Hims could see its stock price reach $2000, driven by its ability to produce significantly more free cash flow per share, continuing its impressive track record of optimizing its operations.
Hims & Hers Health, Inc. (HIMS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held HIMS at the end of the third quarter which was 37 in the previous quarter. While we acknowledge the risk and potential of HIMS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HIMS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.