Key points
- Healthcare stocks are mostly known for their massive growth once you add a little technology.
- Hims & Hers stock is the hottest name in the industry for all the right reasons.
- No competitor comes even close to analysts’ perception.
- 5 stocks we like best from Ulta Beauty
Investing in healthcare stocks might not sound very exciting. This group of low beta stocks serves as a defensive area of the consumer staples sector without much growth or activity. That is, of course, until technology kicks in and everyone knows that’s where all the market action seems to be taking place today.
You can justify your excitement His and Hers Health Inc. NYSE: HIM thanks to its constant demand, exciting growth and interesting technological proposition. You may have seen the company’s advertisements on social media platforms such as Instagram and YouTube.
Touching on challenging and commonly shared issues like hair loss and intimate aspects of health and relationships, this company is close to being the proverbial “shooting fish in a barrel” when it comes to demand and future growth. But this means taking an imaginative approach; Analysts are also bringing Wall Street approval to the direction this stock may soon go.
Moment: on your side
When professional traders from investment houses like them The Goldman Sachs Group NYSE:GS AND Morgan Stanley NYSE: MS start looking for places to deploy some of your purchasing power, a process called “top-down analysis” is typically applied. The overall goal is to find the best pockets of the economy that promise outsized returns.
The latest jobs report shows that the US economy created 353,000 jobs in the last month. Of these, 70,300 jobs ended up in the private healthcare sector; it’s close to 20%!
Is this an indication of busier times for your industry or your respective business? That’s exactly what’s happening in the healthcare industry today, inevitably pushing the limits of Hims stock.
Why the Selected healthcare SPDR fund NYSEARCA: XLV has underperformed the broader S&P 500 index by as much as 13.2% over the past 12 months, the gap has widened enough to make you excited to close out the performance by aligning your portfolio with the best healthcare stocks to catch up with the rest of the index the market.
Looking for further discount to add to this recovery story, you can see how Hims shares are trading at just 77% of their 52-week high prices.
According to Wall Street, a decline of 20% or more from recent highs is considered a bear market; well, once you look at the company’s numbers, you’ll understand why it shouldn’t be in anything but a bull market.
The market is after this
What could make analysts feel so comfortable setting a $12.30 per share price target on Hims stock? One of the main components is analysts’ own projections for earnings per share growth over the next 12 months, which represents a staggering rate of 162.5%.
Comparing these figures to a nearby competitor bringing some tech excitement to the healthcare sector, for example GoodRx Holdings Inc. NASDAQ: GDRXcan make the distinction even clearer.
Analysts see only 44.4% EPS growth for the next 12 months, which is less than half the expected rates for Hims stock; There must be a reason for that.
So what do current corporate financials look like today, aside from the obvious demand trends? Moving on to management’s investor presentation for the latest quarterly results can be a great place to start.
In addition to the excellent marketing, here are the main takeaways from that presentation to further develop your potential bull case. Over 90% of revenue is derived on a recurring basis, meaning it does not come from one-time sales but rather from subscriptions or subscription models.
Another title with a similar retention rate is Ulta Beauty Inc. NASDAQ:ULTA, which led investors to move smoothly up and to the right. Revenue growth increased 57% over the year thanks to 56% growth in the subscriber base.
Even better, operating at a 75% gross margin allows management to aggressively reinvest in its growth strategy, which analysts absorb and justify through their targets and projections.
Before you consider Ulta Beauty, you’ll want to hear it out.
MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Ulta Beauty wasn’t on the list.
While Ulta Beauty currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
View the five stocks here
Are you thinking about investing in Meta, Roblox or Unity? Click the link to find out what streetwise investors need to know about the metaverse and public markets before making an investment.
Get this free report