I’m Betting This Meme Play Could Become a Healthy Trade
Here’s why this subscription healthcare and lifestyle company could muscle up soon — and why you should proceed with caution.
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The market had a shaky start on Wednesday due to two stories. The first was that Meta Platforms (META) was looking to move into the cloud business by selling excess compute capacity. This hit data centers and some of the AI infrastructure names on concerns about increased competition.
The second issue was Fed Chair Kevin Warsh’s hawkish tone during an appearance in Europe. He expressed great confidence in the U.S. economy and leadership in AI, but he is avoiding predictions about inflation and that makes the market nervous.
Things turned around quickly, which is likely due in part to the seasonal tendencies. As I noted the first trading day of July has the highest odds of being positive.
I reduced some biotechnology positions and a few other things, but I continue my hunt to put cash to work and adding to Hims & Hers Health (HIMS).
Why I Am Buying Hims & Hers Ahead of the July Catalysts
Two analyst target increases were reported this morning on Hims & Hers Health. Bank of America raised its target to $36 from $25 with a “Neutral” rating. Canaccord raised its target to $40 from $32 with a “Buy” rating and the new Wall Street high. Both firms cited the same reason: improving Bloomberg Second Measure credit card data showing the branded weight loss business is gaining traction faster than the market expected.
I ramped up my position in HIMS this week. I have had various size positions in the name for a while and have traded around it as the story developed, but the setup that attracted my attention is as follows:
Why I Bought
The peptide talk is attracting meme players back into the stock. That is the specific trigger.
HIMS has been one of the most volatile meme-type names in the market since 2024. The compounded semaglutide boom sent the stock from the teens to the 70s in six months. The regulatory crackdown sent it back to the 20s in a matter of weeks. The Novo Nordisk settlement in March triggered a 48% one-week rally. When the retail momentum crowd focuses on this stock, it moves in big steps. When they lose interest, it drifts sideways or drifts lower.
The peptide story is bringing that crowd back. Retail traders are looking at the July 23-24 advisory committee meeting as the next binary catalyst that can drive a meme move. The Food and Drug Administration staff has recommended against allowing compounding pharmacies to legally manufacture seven peptides including BPC-157 and MOTS-c. The newly appointed advisory panel has several members with backgrounds that suggest they may be more constructive on compounding. If the panel overrides the staff recommendation, HIMS can be first into a market that is currently served by unregulated research chemical websites.
I am not buying HIMS because I know how the panel will vote. I am buying it because the setup produces the kind of retail flow that has driven the meme moves in this name before. The credit card data gives the story fundamental support that was missing during earlier meme runs. The two target raises this morning give it validation. The peptide catalyst gives it a specific event to trade around.
The Business in Plain Language
For readers who have not followed the name, here is what HIMS actually does. It sells prescription medications through virtual doctor consultations and mail order delivery. About 2.6 million subscribers pay recurring fees for hair loss, sexual health, mental health, and skin care products. That base business is profitable and generates recurring cash flow.
The growth business is weight loss. HIMS started by selling compounded semaglutide, which is a generic version of the same drug found in Wegovy and Ozempic. When the FDA cracked down on compounding and Novo Nordisk sued, the company had to pivot. It now distributes branded Novo Nordisk product through a partnership announced in March. The oral Wegovy launch has reached 33% of total prescriptions by May and stabilized in the low 30% range. HIMS also has a non-exclusive relationship with the LillyDirect pharmacy system to distribute Zepbound and other Eli Lilly weight loss products.
Why I Am Optimistic
I own the stock, because two catalysts hit over the next four weeks and both look like they could go the right way.
The credit card data both analysts cited this morning is the specific evidence that the branded transition is producing results. Adjusted year-over-year sales improved from mid- to high-single digits in April to high teens in June. That is a meaningful acceleration in a single quarter. It suggests the Q2 earnings report will be better than the market has been pricing.
The July 23-24 advisory committee meeting comes second. If the panel overrides the FDA staff recommendation and allows compounded peptides, the peptide franchise becomes a real growth driver. Even a partial or ambiguous decision could be enough to keep the retail momentum going. The panel composition suggests the outcome is not predetermined against HIMS.
The valuation is aggressive on a short-term basis. The stock trades at 57-times trailing price-to-earnings and 67-times forward earnings. That is only a problem if the company misses. Growth stocks that beat expectations do not get valued on trailing multiples. They get valued on the next set of expectations, which get raised by the beat. If HIMS delivers on Q2 and gets a favorable panel outcome, the multiple stops being a headwind and becomes a feature.
What Could Go Wrong
I own the stock because I think both catalysts skew favorable. I do not own it because I think success is guaranteed.
The Q2 miss is possible. The credit card data is directional evidence, not a certainty. If subscriber retention on the GLP-1 franchise is weaker than the card data suggests, the second half earnings before interest, taxes, depreciation, and amortization ramp gets harder and the stock gets punished.
The panel could side with the FDA staff on peptides. That would remove the near-term peptide catalyst and leave HIMS to defend the valuation on the branded weight-loss business alone.
The competitive dynamic in telehealth GLP-1 distribution is going to intensify as Amazon One Medical (AMZN) rolls out its integrated program, and the CFO’s sale of 19,645 shares in April at $29.96 is worth noting even if routine.
Any of those factors could pressure the stock. The meme character of the name means the reaction to a disappointment would be sharp.
At the time of publication, DePorre was long HIMS.
