On Monday, BofA Securities maintained its Underperform rating on shares of Hims and Hers (NYSE:HIMS), with a steady price target of $18.00. The stance comes in light of recent political developments, where President-elect Donald Trump nominated Dr. Martin Makary to head the US Food and Drug Administration (FDA).
Dr. Makary, currently the Chief Medical (TASE:PMCN) Officer for telehealth company Sesame, which also sells compounded semaglutide, is known for his opposition to vaccine mandates.
The FDA's upcoming decisions regarding the sale of compounded GLP-1s, like the ones sold by Hims and Sesame, will be influenced by its new commissioner. The appointment of Dr. Makary, who is associated with the compounding industry, is seen as a potentially positive sign for Hims and its peers. However, it remains uncertain whether Dr. Makary will be confirmed or if the FDA's stance on GLP-1 compounding will indeed become more favorable.
Last week, the FDA delayed its decision on the shortage of branded tirzepatide, a situation that is closely watched as it could affect the agency's approach to the semaglutide shortage. The FDA has announced that it will file a joint status report by December 19th, or within seven days of its decision on remand, whichever comes first. This delay could mean that the current FDA administration might postpone action on compounded GLP-1s until the next administration is in place.
BofA Securities' analysis suggests that having an FDA leader with apparent support for GLP-1 compounding could benefit the industry and companies like Hims. Despite this potential upside, BofA Securities has decided to maintain its Underperform rating on Hims due to negative competitive developments, while acknowledging the uncertain future of the GLP-1 market.
In other recent news, Hims & Hers Health, Inc. reported a significant 77% year-over-year increase in third-quarter sales, surpassing $400 million, with an adjusted EBITDA over $50 million. The company projected Q4 2024 revenue between $465 million and $470 million, marking an 89% to 91% year-over-year increase. Full-year revenue is expected to be between $1.46 billion and $1.465 billion, reflecting a 67% to 68% increase.
In other developments, the company expanded its board of directors and appointed a new independent director, Deb Autor. TD Cowen reaffirmed its Buy rating on Hims & Hers.
Piper Sandler raised Hims & Hers' price target from $18 to $21, maintaining a Neutral stance, and Needham raised the price target to $28, maintaining a Buy rating. The company announced plans to diversify its product offerings, including the launch of liraglutide, the first generic GLP-1, in 2025. These are the recent developments.
InvestingPro Insights
While BofA Securities maintains an Underperform rating on Hims and Hers (NYSE:HIMS), recent financial data and InvestingPro Tips paint a more nuanced picture of the company's performance.
According to InvestingPro data, Hims has shown impressive revenue growth, with a 56.7% increase over the last twelve months as of Q3 2024, and an even more striking 77.13% quarterly growth in Q3 2024. This robust growth is complemented by a healthy gross profit margin of 81.13%, indicating strong pricing power and efficient cost management.
InvestingPro Tips highlight that net income is expected to grow this year, and the company has been profitable over the last twelve months. These factors suggest that Hims is successfully converting its revenue growth into bottom-line results, which could be particularly important as the company navigates the uncertain regulatory landscape surrounding GLP-1 compounding.
The market seems to be recognizing this potential, as evidenced by the stock's strong performance. InvestingPro data shows a remarkable 208.15% price return over the past year, with the stock trading near its 52-week high. This positive momentum is further supported by InvestingPro Tips indicating significant returns over various time frames, including the last week, month, and three months.
While BofA Securities' concerns about competitive developments are valid, the company's financial performance and market reception suggest there may be more to the Hims story. Investors seeking a more comprehensive analysis might consider exploring the additional 15 tips available on InvestingPro, which could provide further insights into the company's potential amid the evolving regulatory environment.
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