September looms as a risk month for stocks, Yardeni says
On Thursday, Citi reiterated a Sell rating with a $27.00 price target for Hims & Hers Health, Inc. (NYSE:HIMS). The reaffirmation follows a recent legal development where a Texas Northern Court ruled against the Outsourcing Facilities Association’s (OFA) preliminary injunction against the FDA. This decision relates to the FDA’s removal of tirzepatide from the drug shortage list, which has implications for pharmacies compounding the drug.
According to the court’s decision, pharmacies categorized under section 503A must cease the compounding of tirzepatide in bulk immediately, and those under section 503B have until March 19th to comply. Although the details of the court order are not publicly available due to the order being sealed, the outcome suggests a halt to bulk compounding of tirzepatide.
The ruling is seen to have a direct impact on a pending case involving semaglutide, a medication in the same category as tirzepatide. The case number 4:2025cv00174 is still awaiting a decision, but analysts at Citi anticipate a similar outcome in favor of the FDA, as the facts of the case closely resemble those in the tirzepatide situation.
The analyst at Citi, Daniel Grosslight, expressed expectations that Hims & Hers stock would likely trade lower due to the ruling and its potential consequences on the semaglutide case. The anticipation is that the halt on compounding these drugs in bulk could affect Hims & Hers’ business, which is reflected in the Sell rating and price target set for the company’s shares.
In other recent news, Hims & Hers Health, Inc. has been the focus of several analyst reports and competitive developments. BofA Securities maintained its Underperform rating on the company with a price target of $21, citing challenges in the direct-to-consumer channel and potential impacts from a recent court ruling on tirzepatide compounding. The firm projects over $200 million in revenue from GLP-1 products in the first quarter of 2025, contributing to an expected $725 million in weight loss revenue for the year. Meanwhile, Citi analyst Daniel Grosslight reaffirmed a Sell rating with a $27 target, highlighting competitive pressure from Novo Nordisk (NYSE:NVO)’s launch of NovoCare Pharmacy, which offers the weight management drug Wegovy at a competitive price.
The introduction of NovoCare Pharmacy is expected to impact Hims & Hers, particularly as it navigates regulatory changes affecting its compounding business. Despite these challenges, Hims & Hers plans to continue compounding semaglutide under a personalization exemption for 503A pharmacies. Truist Securities, after discussions with the company’s management about their fourth-quarter 2024 performance, raised its price target to $39 while maintaining a Hold rating. This adjustment reflects a cautiously optimistic view of the company’s future potential amidst competitive and regulatory pressures.
The ongoing developments underscore the competitive landscape Hims & Hers faces, particularly from major players like Novo Nordisk and Eli Lilly (NYSE:LLY). As the company adapts to these market dynamics, its strategy to maintain its compounding operations and expand its offerings will be critical for investors to monitor.
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