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On Tuesday, BofA Securities maintained its Underperform rating and a $21.00 price target for Hims & Hers Health, Inc. (NYSE:HIMS), following the Food and Drug Administration’s (FDA) recent update on enforcement timelines for drug compounding. The FDA’s updated guidance extends the enforcement discretion for compounding semaglutide, a medication relevant to Hims & Hers offerings, until April 22, 2025, or until a court decision is made in the ongoing Outsourcing Facilities Association (OFA) v. FDA case, whichever comes later. This extension applies to both 503A and 503B pharmacies, with the latter now having a similar deadline extension until May 22, 2025, or the court’s decision date.
The FDA has also clarified its stance on tirzepatide, a drug not provided by Hims & Hers, mandating that 503A pharmacies must stop compounding, distributing, or dispensing tirzepatide injection products immediately. However, the FDA has indicated it will not take action against 503B facilities dispensing tirzepatide until March 19, 2025.
The analyst from BofA Securities, Michael Cherny, reiterated the Underperform rating for Hims & Hers, a telehealth company that provides personalized health and wellness products. The reiteration of the rating comes in light of the FDA’s announcement, which directly impacts the regulatory environment for one of the medications relevant to the company’s business.
The FDA’s updated enforcement timelines provide a clearer regulatory framework for the compounding of semaglutide, a medication used in treatments that are part of Hims & Hers’ product lineup. The company, known for its direct-to-consumer healthcare platform, will continue to operate under these new guidelines until the specified deadlines or the resolution of the court case.
For investors and stakeholders in Hims & Hers, the FDA’s decision offers some regulatory certainty in the near term. The company’s stock performance will continue to be influenced by its ability to navigate the changing regulatory landscape and maintain compliance with FDA guidelines.
In other recent news, Hims & Hers Health, Inc. is navigating a series of legal and competitive challenges that have caught the attention of investors. Citi analyst Daniel Grosslight maintained a Sell rating on the company with a $27.00 price target, citing legal developments related to the medication tirzepatide. The Office of the Federal Advocate is appealing a court decision that supported the FDA’s removal of tirzepatide from the shortage list, a move that impacts pharmacies’ ability to compound the drug. BofA Securities also maintained an Underperform rating with a $21.00 target, emphasizing the competitive pressures from Novo Nordisk (NYSE:NVO)’s direct-to-consumer initiative and the regulatory environment affecting semaglutide, a key product for Hims & Hers.
Both Citi and BofA have highlighted the implications of the FDA’s policies on the company’s operations, especially concerning the compounding of semaglutide. The FDA’s ruling requires state-licensed pharmacies to cease compounding tirzepatide in bulk, and similar restrictions are anticipated for semaglutide. Despite these challenges, Hims & Hers plans to continue offering personalized semaglutide through a compound exemption, aiming for significant revenue from weight loss products by 2025. The company faces increased competition as major pharmaceutical players like Novo Nordisk and Eli Lilly (NYSE:LLY) introduce alternative solutions for uninsured patients.
Analysts are closely monitoring how these developments will affect Hims & Hers’ business model and revenue projections. The ongoing legal proceedings and competitive dynamics present uncertainties for the company’s growth prospects. Investors are advised to keep an eye on the evolving situation, as the outcomes could have significant implications for Hims & Hers’ operations and market position.
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