Hims & Hers' International Expansion Faces Growth Concerns

Bank of America has maintained its "underperform" rating for Hims & Hers Health (HIMS.US), setting a target price of $28, which suggests a notable downside from the current stock price. The bank's analysts, led by Allen Lutz, view the company's recent acquisition of the European telemedicine platform Zava as a strategic move to enter international markets. However, they also point out the slowing growth in Hims & Hers' core U.S. business and the uncertainties associated with international expansion.

On June 3, Hims & Hers announced its plans to acquire Zava for cash, with the transaction expected to close in the second half of 2025. Zava has over 1.3 million active users and operates in the UK, France, Ireland, and Germany, offering services that closely align with Hims & Hers' portfolio, including weight management, men's and women's health, and skincare. Zava's user rating on Trustpilot is 4.1 out of 5, indicating strong customer satisfaction.

The acquisition is seen as a way for Hims & Hers to leverage Zava's established operations to quickly enter major European markets and achieve synergies in product offerings. This move is expected to further strengthen Hims & Hers' direct-to-consumer (DTC) business model. However, Bank of America has raised concerns about the slowing growth in Hims & Hers' U.S. market. The bank noted that the order growth rate in the U.S. has dropped from an average of 18-19% in 2024 to 3-4% in the second quarter of 2025, significantly lower than the 8% seen in the first quarter. This decline suggests that the U.S. market may be nearing saturation and facing increased competition.

Additionally, preliminary data indicates that Zava's desktop and mobile traffic has decreased by 13% year-over-year. Historical examples of U.S. medical technology companies expanding internationally, such as Cerner and Teladoc's BetterHelp, have often ended in failure due to significant differences in regulatory environments across countries. These factors contribute to the uncertainty surrounding Hims & Hers' international expansion efforts.