With a sudden -10.4% drop to $25.59, Hims & Hers Health has Wall Street wondering if its shares will keep moving past its target price of $24.9. With an average rating of hold, and analysts assigning target prices from 18.0 to 38.0 dollars per share, investors will be betting heavily on the Medical and Nursing Services stock's next move.
With a short interest of 22.2%, we can infer that the market sentiment on Hims & Hers Health is negative. Each short position represents an investor's expectation and hope that the stock's price will reverse its present course and start falling.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on Hims & Hers Health is to look at the percentage of institutions that are invested in the stock. In this case, 65.3% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
To sum up, Hims & Hers Health is probably the subject of mixed market sentiment because of an analyst consensus of little upside potential, a hold rating, an unusually large proportion of its shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about HIMS:
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The stock has trailing 12 month earnings per share (EPS) of $0.44
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Hims & Hers Health has a trailing 12 month Price to Earnings (P/E) ratio of 58.2 compared to the S&P 500 average of 29.3
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The company has a Price to Book (P/B) ratio of 12.67 in contrast to the S&P 500's average ratio of 4.74
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Hims & Hers Health is a Health Care company, and the sector average P/E and P/B ratios are 26.07 and 3.53 respectively
