Needham analyst Ryan Macdonald initiated coverage on Hims & Hers Health Inc. (NYSE:HIMS) at a Buy rating with a price target of $24.

The analyst writes that, despite increased stock volatility with its entry into the compounded GLP-1 market, he anticipates a positive impact on HIMS's fundamentals and sees strong growth potential.

With the weight loss market valued at around $373 billion, HIMS is well-positioned to capitalize on this opportunity, addressing key barriers of cost and access to treatment, adds the analyst.

Macdonald says that HIMS is not solely dependent on GLP-1; the company is already growing at over 40% with revenues exceeding $1 billion, and it has multiple growth drivers and margin expansion opportunities through higher acuity care and personalized, margin-accretive products.

The analyst expects EBITDA of $147.6 million in FY24 and $233.1 million in FY25.

This month, the company reported quarterly earnings of six cents per share, which beat the analyst consensus estimate of three cents. Sales of $315.648 million beat the analyst consensus estimate by 5.24%.

Hims & Hers expects third-quarter revenue in a range of $375 million-$380 million and full-year revenue of $1.37 billion-$1.4 billion.

Investors can gain exposure to the stock via Amplify ETF Trust Amplify Online Retail ETF (NYSE:IBUY) and Invesco Dorsey Wright Healthcare Momentum ETF (NASDAQ:PTH).

HIMS Price Action: Hims & Hers Health shares are down 0.12% at $16.55 at publication Thursday.

• Telehealth Firm Hims & Hers Health Rides High On Demand for Copycat Weight Loss Drugs Amid Supply Shortages

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Courtesy of Hims & Hers Health, Inc.