HIMS is moving into menopause care, a new market

After the close, Citi published a research note pointing out the key limitations

Amazon One Medical's entry sent HIMS down 4%

• Amazon's $29 remote consultation is limited to prescription renewals and does not cover new prescriptions
• Only 2 renewals a year are allowed
• Citi called this a 'big caveat' and argued that it sharply lowers the chance of Amazon replacing subscription platforms

Amazon is doing branded-drug distribution plus convenient renewals. Customer acquisition (the first consultation) and deep management (the data flywheel, cross-selling across products) are still HIMS's moat. The short-term sentiment hit is bigger than the real business threat.

Action

Target raised from $25 to $30, Neutral rating maintained

Implication

The $30 target is roughly equal to the current share price, which implies BofA sees limited upside in the short term, though the downside risk is also narrowing

Note

Second raise in 2 weeks ($21 to $25 to $30)

View

Amazon's GLP-1 plan mainly appeals to long-term users who want to cut costs. It may squeeze HIMS's GLP-1 revenue further, but the rest of the platform is undervalued.

About $284,000

Together with the earlier sale by CFO Okupe, both executives have recently carried out pre-set selling plans around $30

20 Apr

Pre-set 10b5-1 plan

$30.00

299,368 shares still held after the sale

Chief Legal Officer Soleil Boughton

9,463 shares

Both were pre-set 10b5-1 trades rather than reactive sales, and they do not reflect a view on the fundamentals. In practice, though, the $30 area carries some insider supply pressure.

On 22 Apr HIMS began offering an oestrogen (estradiol) patch on its Hers platform, from $134 a month, with optional progesterone

Demand surged after the FDA removed the black-box warning on hormone replacement therapy last year, but supply chains cannot keep up, and the industry expects the shortage could last 2-3 years

• 1.3 million women in the US enter menopause each year, which means long-term repeat demand
• By locking in supply early, HIMS can win customers while competitors are out of stock
• Together with the existing hormone health business (testosterone therapy), it gives HIMS a two-track line-up for women and men
• It further supports the positioning as a 'full life-cycle health platform'

Q1 results on 11 May after the close

Traded in a $28.46-29.93 range

$29.76 (-4.03%)