The shares of Hims & Hers Health (NYSE: HIMS), a direct-to-consumer telehealth company, have surged by more than 40% since the release of its Q4 earnings report and more than 50% since the start of the year.
![HIMS YTD stock price chart. Source: Google Finance](https://assets.finbold.com/uploads/2024/03/HIMS-YTD-stock-price-chart.jpg)
Despite being relatively unknown with a $2 billion valuation, the company has caught the interest of investors due to its impressive growth and improving financial performance.
It might feel like a missed opportunity when news emerges of a stock already gaining momentum. However, there’s always potential for new opportunities, as HIMS still offers a reasonable valuation and entry point.
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Strong performance since the IPO
Since its IPO in 2021, Hims & Hers has consistently demonstrated robust growth. Over the past three years, the company has nearly tripled its subscriber base to over 1.5 million, accompanied by impressive revenue growth. While Hims & Hers needs to maintain its execution, substantial evidence suggests that HIMS is on the right track, which could drive significant long-term expansion.
Considering healthcare’s broad appeal, every adult represents a potential customer, and Hims & Hers’ current 1.5 million patient base is just a fraction of the US population alone. Management estimates that each specialty focus represents a market of between 80 million to 100 million US adults.
![Expanding customer base of Hims & Hers. Source: Hims & Hers](https://assets.finbold.com/uploads/2024/03/Expanding-customer-base-of-Hims-Hers-1024x370.jpg)
There is still room for growth of HIMS
Despite its recent surge, the stock trades at about 35 times its projected 2024 earnings. With management expecting a 38% revenue increase this year and the company’s strong performance in 2023 surpassing initial forecasts, there’s a possibility of conservative estimates.
Additionally, next year’s earnings per share estimate of $0.50, reflecting a 31% increase, may undervalue Hims & Hers’ operational efficiency.
![Hims & Hers 2024 outlook. Source: Hims & Hers](https://assets.finbold.com/uploads/2024/03/Hims-Hers-2024-outlook-1024x396.jpg)
Given the current earnings growth rate and P/E ratio, the stock appears undervalued, with the potential for further outperformance, potentially offering a great option for long-term investment.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.