By Sam Boughedda
Hims & Hers Health, Inc. (NYSE:HIMS) shares have jumped more than 10% Thursday after Jefferies analysts upgraded the stock to Buy from Hold, raising the price target to $11 from $7 per share.
They told investors in a research note that after they analyzed app downloads, web traffic, and market share to better understand the current trends, the data continues to suggest "momentum in the underlying business remains strong."
"Traffic and app downloads continue to grow," the analysts wrote. "In the past, we have used a correlation between website visits and revenue to get a sense for HIMS' quarterly growth. We believe the correlation in our analysis has started to break down in recent quarters due to increasing subscription rev and adoption of the phone app."
They acknowledged the shortcomings of website traffic correlation to revenue but highlighted that traffic on the site grew 29% year-over-year compared to 24% in the third quarter, "which is still a sign that the business is healthy despite some broader economic concerns."
They also stated that app downloads grew 12%, and they believe this is another sign that the underlying business is healthy.
"Hims and Hers remains a market share leader within the category," the analysts argued. "We find it encouraging that Hims and Hers seem to be gaining share relative to competitors which speaks to the impressive brand awareness and ongoing leadership in the sector."