After recommending Hims & Hers 
HIMS as a 'Strong Buy' from $6, we recently downgraded it due to its stretched valuation. Since then, the stock has dropped over 40%, but we don't yet see it as a clear value proposition at current levels.
HIMS combines two critical elements:
- High lifetime customer value with low churn
- High gross margins (customers generate substantial gross profit)
This combination gives management strategic flexibility with cash deployment. The sticky business model makes sense: customers treating conditions like hair loss or weight management have little incentive to switch providers.
Recent financial results have been impressive:
- Robust YoY revenue growth (~50% expected this year, ~20% for following years)
- EPS turning positive with significant operating leverage
- Potential to reach ~$400M in operating income in the near future
At ~$27.50 per share, HIMS trades at:
- 4.1x sales
- 52x TTM net income
While our bullish projections suggest this multiple could compress to 18-20x within 12-18 months, we'd prefer entry at $18-$20 per share.
Given our outlook, selling put options presents an attractive alternative: Selling the August 15th $18 strike puts:
- Premium: $1.30 per share ($130 per contract)
- Required margin: ~$1,670 per contract
- Yield: 7.7% over 112 days (27.7% annualized)
This strategy offers two favorable outcomes:
If HIMS stays above $18: Keep the premium (27.7% annualized yield)
If HIMS falls below $18: Buy shares at an effective 35% discount from current price (plus premium)
At $18 per share, HIMS would trade at ~36x TTM earnings - a much more attractive entry point.
Risks:
- If HIMS collapses suddenly, put sellers must still purchase at $18
- HIMS remains highly volatile
- Two potential earnings reports during the option period could increase volatility
- Stock could potentially trade into the lower teens
Despite these risks, the risk/reward ratio appears favorable, and we maintain a 'Buy' rating on HIMS.
HIMS as a 'Strong Buy' from $6, we recently downgraded it due to its stretched valuation. Since then, the stock has dropped over 40%, but we don't yet see it as a clear value proposition at current levels.HIMS combines two critical elements:
- High lifetime customer value with low churn
- High gross margins (customers generate substantial gross profit)
This combination gives management strategic flexibility with cash deployment. The sticky business model makes sense: customers treating conditions like hair loss or weight management have little incentive to switch providers.
Recent financial results have been impressive:
- Robust YoY revenue growth (~50% expected this year, ~20% for following years)
- EPS turning positive with significant operating leverage
- Potential to reach ~$400M in operating income in the near future
At ~$27.50 per share, HIMS trades at:
- 4.1x sales
- 52x TTM net income
While our bullish projections suggest this multiple could compress to 18-20x within 12-18 months, we'd prefer entry at $18-$20 per share.
Given our outlook, selling put options presents an attractive alternative: Selling the August 15th $18 strike puts:
- Premium: $1.30 per share ($130 per contract)
- Required margin: ~$1,670 per contract
- Yield: 7.7% over 112 days (27.7% annualized)
This strategy offers two favorable outcomes:
If HIMS stays above $18: Keep the premium (27.7% annualized yield)
If HIMS falls below $18: Buy shares at an effective 35% discount from current price (plus premium)
At $18 per share, HIMS would trade at ~36x TTM earnings - a much more attractive entry point.
Risks:
- If HIMS collapses suddenly, put sellers must still purchase at $18
- HIMS remains highly volatile
- Two potential earnings reports during the option period could increase volatility
- Stock could potentially trade into the lower teens
Despite these risks, the risk/reward ratio appears favorable, and we maintain a 'Buy' rating on HIMS.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.