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On Wednesday, Citi analyst Daniel Grosslight confirmed a Sell rating for Hims and Hers Health, Inc. (NYSE:HIMS), maintaining a $27.00 price target on the company’s shares. The company, currently valued at $8.65 billion, has demonstrated remarkable performance with a 184% return over the past year and impressive revenue growth of 69%. According to InvestingPro analysis, HIMS is currently trading above its Fair Value. The reaffirmation of the rating comes as Novo Nordisk (NYSE:NVO) A/S launched NovoCare Pharmacy, a direct-to-consumer initiative that provides uninsured or uncovered patients access to the weight management drug Wegovy (semaglutide) for a monthly fee of $499. This move by Novo Nordisk is seen as competitive pressure on Hims and Hers, which also offers compounded semaglutide.
Grosslight noted that NovoCare Pharmacy’s business model is similar to LillyDirect, a service by Eli Lilly and Company (NYSE:LLY) that supplies Tirzepatide to cash-paying customers at rates of $350 per month for a 2.5mg dose or $499 for a 5mg dose. The analyst expects the introduction of NovoCare Pharmacy to negatively impact Hims and Hers’ stock performance.
The backdrop for this development includes a regulatory update where, following the removal of semaglutide from the shortage list, compounding pharmacies classified as 503A must cease producing identical bulk compounds by April 22, 2025, and 503B facilities must stop by May 22, 2025. Despite these impending restrictions, Hims and Hers has indicated that it plans to continue compounding semaglutide by relying on a personalization exemption for 503A pharmacies. The company has also stated that a majority of its patients using compounded semaglutide are on a personalized dosage.
The competition in the direct-to-consumer pharmaceutical space is intensifying with major players like Novo Nordisk and Eli Lilly offering alternative solutions to uninsured patients. Despite competitive pressures, HIMS maintains strong fundamentals with a gross profit margin of 79.45% and positive earnings per share of $0.58. InvestingPro data reveals 15+ additional insights about HIMS’s competitive position and growth prospects. Hims and Hers’ strategy to navigate the regulatory environment and maintain its compounding business will be a key factor to watch in the face of these industry shifts. The company’s financial health score is rated as GREAT by InvestingPro, with strong metrics across growth and profitability. Discover comprehensive analysis and detailed financial metrics in the exclusive Pro Research Report, available to InvestingPro subscribers.
In other recent news, Hims & Hers Health Inc. has seen several significant developments. Novo Nordisk has launched NovoCare Pharmacy, offering FDA-approved Wegovy at a reduced cost, potentially impacting Hims & Hers’ market share in the direct-to-consumer health space. Analysts have also been adjusting their expectations for Hims & Hers. Truist Securities raised its price target from $24 to $39 while maintaining a Hold rating, following discussions about the company’s fourth-quarter 2024 performance and future prospects. TD Cowen increased its price target to $44, maintaining a Buy rating, citing confidence in the company’s long-term growth despite short-term challenges. Piper Sandler adjusted its price target to $35, keeping a Neutral stance due to uncertainties anticipated in 2025. Meanwhile, Leerink Partners lifted its target to $40 with a Market Perform rating, noting the resolution of the semaglutide shortage and the company’s focus on growth potential. These developments reflect the dynamic environment Hims & Hers operates in, with potential implications for its future performance.
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