Morningstar maintained a ‘No Moat’ view, citing low telehealth barriers and offerings rivals can replicate “with relative ease.”
- Morningstar called the lawsuit a “new legal overhang” and warned it “could result in a costlier settlement for Hims.”
- The firm kept its $23 fair value estimate, implying about 15% downside from current levels.
- Peptides are a potential upside catalyst, but Morningstar still sees “a lot of question marks” around execution.
Shares of Hims & Hers Health, Inc. (HIMS) are headed for a fourth consecutive weekly loss as a fresh Federal Trade Commission (FTC) lawsuit adds to legal risk and Morningstar sticks with its ‘No Moat’ view and ‘Very High’ uncertainty rating.
HIMS stock jumped 8% on Thursday but remained on track for a weekly loss, down about 4% so far, and is headed for its worst monthly run since February.
FTC Case Clouds HIMS Outlook
The FTC, Utah and Los Angeles County sued Hims this week, alleging that the company misled consumers over subscriptions and cancellations, and sharing sensitive health information with Meta and Snap. Morningstar called the case a “new legal overhang,” noting that Hims had only recently moved past earlier weight-loss-related legal issues.
Hims had already disclosed the investigation and about $15 million in probable losses, but Morningstar said that the FTC action suggests a prior settlement offer was insufficient and “could result in a costlier settlement for Hims.” Morningstar nevertheless kept its $23 fair value estimate, implying a 15% downside from current levels, saying Hims’ underlying fundamentals remain unchanged.
Morningstar Flags Weak Competitive Moat At Hims
Morningstar’s biggest concern is that Hims lacks a durable competitive advantage. “We assign Hims & Hers a no-moat rating because we do not believe the firm possesses any structural advantages sufficient to generate excess returns over the next 10 years,” the brokerage said. The firm said barriers to entry in telehealth are low and rivals can replicate Hims’ offerings “with relative ease.”
Morningstar also said it sees no “revolutionary or meaningfully different products” and believes Hims’ offerings in areas such as hair care, sexual health and weight loss are not meaningfully distinct from peers.
The analyst maintained its ‘Very High’ uncertainty rating, citing the stock’s sensitivity to regulatory and legal headlines. “Hims shares are highly volatile,” the firm said, adding that GLP-1 regulation and litigation could have a meaningful impact on shares.
Peptides Could Spark A Hims ‘Growth Spurt’
Investors are also eyeing peptides as a potential growth driver. An FDA advisory committee recently backed six of seven peptides under review for the 503A Bulk Drug Substances List, though the recommendations are not approved. Morningstar said peptides could add a new revenue stream and even spark a “growth spurt,” but cautioned that the market remains difficult to size.
The brokerage still expects low-teens annual revenue growth and more than 4.5 million subscribers by 2035, but its forecasts trail management’s targets. Hims is targeting at least $6.5 billion in revenue and $1.3 billion in adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) by 2030. Morningstar is more conservative, forecasting $4.3 billion in revenue and about $720 million in adjusted EBITDA.
Morningstar said there remain “a lot of question marks” around execution and margins, calling Hims’ longer-term profitability target “highly optimistic.”
How Do Retail Traders Feel About HIMS?
On Stocktwits, retail sentiment for HIMS slipped to ‘bullish’ from ‘extremely bullish’ levels a week ago amid ‘high’ message volume.
One user said, “$HIMS breaking support here on news headline of Federal Trade Commission suing them for wrongful billing, cancelation, and privacy practices”
View this Stocktwits post
Another user noted, “$HIMS bounced strongly today. Short-term moves can shake out weak hands, but the bigger picture still comes down to business execution. Staying disciplined matters more than reacting to every swing.”
View this Stocktwits post
HIMS stock has declined 59% over the past year.
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