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On Thursday, BofA Securities maintained an Underperform rating on Hims & Hers Health, Inc. (NYSE:HIMS) with a steady price target of $21.00. The reaffirmation of the stock rating came after a recent court ruling that may impact the company’s operations. Judge Mark Pittman ruled in favor of the U.S. Food and Drug Administration (FDA) in a case concerning the compounding of tirzepatide, denying a motion for preliminary injunction by the Outsourcing Facilities Association (OFA).
The decision, which is currently sealed, follows the FDA’s updated policies requiring state-licensed pharmacies under section 503A to cease compounding tirzepatide by Sunday, while outsourcing facilities under section 503B have until March 19, 2023. The OFA’s lawsuit, filed in October 2024, challenged the FDA’s resolution of the tirzepatide shortage without sufficient notice or explanation. Want deeper insights? InvestingPro subscribers get access to exclusive analysis and 15+ additional ProTips for HIMS, helping investors navigate regulatory impacts on healthcare stocks.
The outcome of the tirzepatide case is seen as indirectly negative for Hims & Hers, particularly if a similar ruling is applied to semaglutide, another compound in contention. Hims & Hers does not compound tirzepatide, but the company’s 503B compounding operation for semaglutide could be at risk if the grace period ending in May is not extended. The ongoing lawsuit was seen as a potential lifeline for compounding pharmacies to continue operations.
Despite the setback, Hims & Hers is adapting by shifting focus towards its 503A compounding opportunity. The company believes it can sell personalized semaglutide through a compound exemption for patients who cannot tolerate the FDA-approved dose of the branded version. This strategy is central to Hims & Hers’ projected $725 million revenue from weight loss products by 2025.
The company’s ability to operate under the compound exemption for semaglutide is considered a critical factor for its stock performance in the coming 6-12 months. BofA Securities plans to host expert calls in the following weeks to further discuss the implications of the court’s decision on Hims & Hers’ business model.
In other recent news, Hims & Hers Health, Inc. has been the subject of several analyst updates and competitive developments. BofA Securities maintained its Underperform rating on the company with a $21 price target, citing increased competition and potential challenges in the direct-to-consumer channel following Novo Nordisk (NYSE:NVO)’s developments. They estimate significant revenue from GLP-1 products in 2025 but express caution about the company’s ability to exceed revenue guidance due to regulatory scrutiny and competition. Meanwhile, Citi reaffirmed a Sell rating with a $27 target, emphasizing the competitive pressure from Novo Nordisk’s new direct-to-consumer initiative, NovoCare Pharmacy, which offers weight management drugs at a reduced cost.
Truist Securities raised its price target for Hims & Hers to $39 from $24, maintaining a Hold rating after discussions with the company’s management about their recent performance and strategic direction. In contrast, TD Cowen increased their price target to $44, maintaining a Buy rating, based on expectations of long-term growth despite potential short-term challenges due to drug supply issues. These developments come amid Novo Nordisk’s launch of NovoCare Pharmacy, which could disrupt the market dynamics for Hims & Hers by offering FDA-approved Wegovy at competitive prices. The company plans to continue compounding semaglutide using a personalization exemption, navigating regulatory changes set for 2025.
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