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On Monday, Citi analyst Daniel Grosslight confirmed a Sell rating and a $27.00 price target for Hims & Hers Health, Inc. (NYSE:HIMS). Grosslight’s statement addressed the recent legal developments involving the medication tirzepatide, which has been the subject of a court case concerning its status on the FDA’s shortage list.
The Office of the Federal Advocate (OFA) has decided to challenge the Texas Northern District Court’s decision supporting the FDA’s removal of tirzepatide from the shortage list. The OFA plans to take the matter to the 5th Circuit Court of Appeals, focusing on several key arguments. These include the FDA’s process in making the decision, alleged oversight of shortage evidence, the decision’s alleged arbitrary nature, and the FDA’s reliance on data from Eli Lilly and Company (NYSE:LLY), the drug’s manufacturer. Despite these legal challenges, InvestingPro data shows HIMS maintains strong fundamentals with a 79.45% gross profit margin and an impressive revenue growth of 69.32% in the last twelve months.
Despite these arguments, Grosslight expressed skepticism regarding the OFA’s likelihood of success in overturning the district court’s ruling. He cites the district court’s strong rationale as a primary reason for his doubt that the appeal will lead to any significant changes concerning tirzepatide’s status.
The legal contention surrounding tirzepatide has caught the attention of investors and industry observers, as the outcome could influence Hims & Hers’ business operations. Tirzepatide is a medication used in the treatment of diabetes, and its availability impacts patients and healthcare providers.
The stock price and investor sentiment toward Hims & Hers may be influenced by the ongoing legal proceedings and Citi’s reiterated Sell rating. As the case progresses through the appeals process, the market will continue to monitor any developments and potential implications for the company and its stakeholders.
In other recent news, Hims & Hers Health, Inc. is facing significant developments affecting its operations and market position. A recent court ruling favored the FDA in a case concerning the compounding of tirzepatide, impacting Hims & Hers’ ability to compound similar drugs like semaglutide. Citi and BofA Securities have maintained their Sell and Underperform ratings, respectively, with price targets of $27 and $21, citing potential challenges from this ruling. The company plans to focus on personalized semaglutide treatments under a compound exemption, aiming for projected revenue of $725 million from weight loss products by 2025.
Meanwhile, Novo Nordisk (NYSE:NVO)’s launch of NovoCare Pharmacy, offering Wegovy at a competitive price, introduces new challenges for Hims & Hers. This move is seen as increasing competition in the direct-to-consumer pharmaceutical space, potentially impacting Hims & Hers’ market dynamics. The introduction of NovoCare Pharmacy is part of Novo Nordisk’s strategy to improve medication affordability and access, further complicating the competitive landscape for Hims & Hers. Analysts from Citi and BofA Securities have noted the intensified competition and regulatory scrutiny as factors that could affect Hims & Hers’ future revenue growth. As the industry adapts to these changes, Hims & Hers’ strategic response will be crucial in navigating these challenges.
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