The shares of Hims & Hers Health (HIMS-5.1%), a multi-specialty telehealth platform, are trading lower on Thursday after Deutsche Bank started its coverage with a Hold recommendation citing concerns on its ad spending and the bottom line.
Noting that Hims (NYSE:HIMS) operates as a direct-to-consumer healthcare platform focused on reproductive health, hair loss, and other conditions, the firm argues that “the company has found a niche targeting Millennial and Gen-Z consumers in often stigmatized disease states.”
Despite the management’s vision and resolve to build upon the business strategy, the analyst stays on the sidelines, highlighting the need for large ad spending for growth and an uncertain path to profitability.
The price target set to $7 per share implies a premium of ~48% to the last close.
Hims (HIMS) shares surged last month after the company’s better-than-expected results for Q4 2021. While the net revenue for the period more than doubled to $84.7M, the net loss rose more than six times to $31.2M as marketing expenses climbed ~121% YoY to $42.7M.