Morgan Stanley analyst Craig Hettenbach reiterated an Equalweight rating and $40.00 price target on Hims and Hers (NYSE: HIMS).

The analyst comments "Hims posted a substantial beat in Q1’25 and guided Q2 revenue below the Street and EBITDA essentially in line. Revenue increased 111% y/y to $586mn, well ahead of our estimate of $531mn and the Street at $535mn ( Exhibit 3 ). EBITDA of $91mn in the quarter beat by $30mn, driven revenue upside and by material leverage in S&M (39% of sales vs. estimate of 45%). Looking out to Q2, management guided to revenue of $540mn and EBITDA of $70mn at the midpoint, compared to the Street at $567mn and $71mn. The company reiterated 2025 guidance of $2.3-$2.4bn in revenue and increased EBITDA by $20mn to a range of $295-$335mn ( Exhibit 4 ). We tweaked our quarterly revenue estimates, lowered gross margin and increased EBITDA on the back of Q1 beat ( Exhibit 5 ). Positives: 1) Significant 50% beat on EBITDA in the quarter raised 2025 EBITDA guidance by 7%. 2) Expanded weight loss offerings to include branded products through a partnerships with Novo (see - Hims & Hers + Novo: From Foes to Partners). Management stated that it’s on track for at least $725mn in weight loss revenue in 2025, highlighting a 300% y/y increase in oral drug subscribers, initial traction in liraglutide and the expectation for ongoing personalized compounded GLP-1. 3) New category launch in hormones (low testosterone and menopause support) expected by year end. Negatives: 1) GM of 73% in Q1 was 420 bps below the Street, missing for the second straight quarter after Q4’24 came in 180 bps light. 2) This marked the first time in the company’s history that next quarter revenue was guided below the Street 3) Hims is seeing a moderation in revenue growth for sexual health as the company continues to shift the mix toward daily use and de-emphasizes on-demand, which could lead to concerns over slowing category growth and/or increasing competition."

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Shares of Hims and Hers closed at $41.88 yesterday.