Hims & Hers Health Stock Decline Sparks ‘Buy the Dip’ Opportunity

The shares of healthcare name Hims & Hers Health Inc (NYSE:HIMS) have recently experienced a notable decline, retreating from their peak of $72.98 on February 19. As of now, the stock has shed 11.9% this month and is on track for its fourth loss in five trading sessions, last recorded at $40.18, down 0.7%. Despite this pullback, historical data suggests that the security may be primed for a rebound.

Historical Performance Indicates Potential Rebound

According to a new study from Schaeffer’s Senior Quantitative Analyst Rocky White, HIMS is currently within one standard deviation of its 50-day moving average. Over the past two months, shares have traded above this trendline 80% of the time, and in eight of the last ten trading days. Such pullbacks have historically led to strong short-term upside, with past instances resulting in a one-month gain 71% of the time, averaging a 10.6% return. A comparable move could push the stock price near $44, further extending its impressive 176.3% year-over-year lead.

Short Sellers Retreat, Potential for Short Squeeze

Interestingly, short sellers are backing off, with short interest down 20.8% in the last reporting period. However, the 46.12 million shares sold short still account for 24.6% of the equity’s available float, indicating there’s still room for a potential short squeeze. This could create a favorable environment for investors looking to capitalize on the stock’s rebound.

Analysts’ Ratings and Market Sentiment

Despite the promising indicators, analysts remain cautious about HIMS, leaving room for upgrades that could act as a bullish catalyst. Currently, nine out of 14 covering firms maintain a “hold” or worse rating on HIMS, suggesting that there is potential for positive shifts in sentiment.

Options Traders Lean Bearish

Options traders are also exhibiting bearish sentiment, as reflected in Hims & Hers Health stock’s Schaeffer’s put/call open interest ratio (SOIR) of 1.47, which sits in the 94th percentile of readings from the past month. Additionally, the equity’s 50-day put/call volume ratio of 1.14 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 99th percentile of its annual range. This indicates that traders are anticipating continued volatility.

Volatility Expectations and Future Outlook

HIMS has consistently exceeded options traders’ volatility expectations, as evidenced by its score of 90 out of 100. This metric suggests that the stock has historically delivered larger-than-expected price swings, which could present opportunities for savvy investors. As the market continues to react to the stock’s performance, those looking to invest may find that now is an opportune moment to consider Hims & Hers Health Inc as a potential ‘buy the dip’ play.

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