Jefferies raises Hims & Hers stock target to $25, maintains hold

On Friday, Jefferies analyst Glen Santangelo adjusted the price target for Hims & Hers Health, Inc. (NYSE:HIMS) stock, increasing it to $25.00 from the previous $21.00, while continuing to recommend a Hold rating on the shares. Santangelo noted the resolution of the Semaglutide shortage and the company's pivot to marketing branded GLP-1 medications, such as tirzepatide/semaglutide and generic liraglutide, on its website rather than compounded semaglutide.

The shift away from compounded solutions is seen as a strategic move to improve Hims & Hers' legal positioning against branded manufacturers' intellectual property. The analysis pointed out a significant reduction in the company's GLP-1 related advertising across social media and television. However, the high cost of the branded GLP-1 offerings, potentially around $2000 per month, could pose a challenge for customer retention, especially when compared to the previous compounded option priced at $169 and a direct-to-consumer competitor priced at $499.

The analyst also expressed skepticism about the sales potential of generic liraglutide, given its limited efficacy and relatively high price of $299 per month. Despite a strong first quarter, there has been a noticeable slowdown in website traffic since the company's Super Bowl advertisement. Additionally, the company's marketing spend on GLP-1 has decreased following the FDA's declaration that the shortage was over.

Santangelo highlighted concerns regarding the company's combination medications, which could attract regulatory scrutiny. Former FDA regulators suggest that such combinations might be in a regulatory gray area, potentially requiring additional clinical trials. Growth in the company's core offerings, excluding weight loss, is expected to slow down, now growing at less than 30%.

The company's strategy to invest in competitive pricing is anticipated to impact margins, even as management believes that personalization could mitigate some of the effects of pricing pressure. Lastly, the analyst cautioned that second-half 2025 estimates might be overly optimistic, with a consensus already assuming approximately 20% growth over fiscal year 2025 and calling for around 36% year-over-year growth in the second half, which could be a challenging target to achieve.

In other recent news, Hims & Hers Health, Inc. has announced the expansion of its pharmaceutical offerings, now including Eli Lilly (NYSE:LLY)'s branded diabetes and weight-loss drug, Zepbound, and a generic version of liraglutide. This expansion is part of the company's strategy to enhance its product lineup and cater to consumer demand for more treatment options. Analysts from Truist Securities and Leerink Partners have maintained their ratings on the stock, with Truist setting a price target of $39 and Leerink at $40, both noting the potential benefits of these new offerings. However, BofA Securities has reiterated an Underperform rating with a $22 price target, expressing skepticism about the material impact of Zepbound on the company's sales due to its high price point and lower margins compared to generic options.

The inclusion of Zepbound, priced at $1,899 per month, positions Hims & Hers alongside competitors like Teladoc (NYSE:TDOC) and LifeMD in the telehealth market. Despite the positive reception from investors, BofA Securities suggests that the decision to offer Zepbound might be more about expanding consumer choice rather than significantly boosting revenue. Leerink Partners has highlighted that the high cost of Zepbound could influence customer demand, while Truist Securities sees the addition of generic liraglutide as a promising development. The company emphasizes its commitment to broadening customer choice and meeting the needs of its users through this expanded product range.

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