BofA Securities adjusted its outlook on Hims and Hers (NYSE:HIMS), raising the price target to $23.00 from $20.00 and maintaining a Buy rating. The revision follows the U.S. Food and Drug Administration's (FDA) recent announcement to reassess the availability of tirzepatide, a drug previously on the agency's shortage list.
The FDA, in a court filing on Friday, indicated a shift in its stance by stating it would reconsider the earlier decision to remove tirzepatide from the shortage list. The agency also noted it would permit compounding pharmacies to continue producing the drug while it reviews the active ingredient's supply status. This move is a departure from the FDA's earlier position this month, which would have restricted compounding pharmacies from making compounded versions of tirzepatide.
The change in direction by the FDA was in response to a lawsuit from the Outsourcing Facilities Association, a compounding industry group. The association argued that tirzepatide was still in short supply, despite the FDA's removal from its shortage list. In light of the FDA's reconsideration, U.S. District Judge Mark Pittman has put the lawsuit on hold.
In addition to the developments around tirzepatide, BofA Securities also highlighted that, as of today, semaglutide remains on the FDA's shortage list. The status of these drugs is significant for companies like Hims and Hers, which could be impacted by the availability and regulatory decisions regarding the medications they offer.
In other recent news, Hims & Hers Health, Inc. reported a significant 52% year-over-year revenue increase in Q2 2024, reaching $316 million, with an adjusted EBITDA of $39 million. The company also issued 976,341 Class A common shares to Nivagen Pharmaceuticals, Inc., expanding its product offerings and market reach through the acquisition of MedisourceRx. This development is part of a series of recent events that include Truist Securities maintaining a hold rating for Hims & Hers, citing the FDA's decision to revisit the shortage of Tirzepatide and the continued authorization for compounding pharmacies to produce its compounded version.
Canaccord Genuity sustained its Buy rating on shares of Hims & Hers, highlighting the potential of its compounded GLP-1 medications amid rising obesity trends. The firm sees a promising total addressable market of approximately $6 to $8 billion. Citi also maintained a neutral rating following the FDA's decision to remove Tirzepatide from its shortage list, which could affect Hims & Hers' future plans.
In addition, Hims & Hers has launched a Service Appreciation Initiative offering discounted weight loss treatments to service members. The company's compounded GLP-1 offering, which is still in demand due to the shortage of Semaglutide, seems poised to continue playing a role in its market performance.
InvestingPro Insights
The recent developments in the regulatory landscape for tirzepatide and semaglutide, coupled with BofA Securities' bullish stance on Hims and Hers (NYSE:HIMS), align with several positive indicators from InvestingPro data. The company's revenue growth of 50.15% over the last twelve months as of Q2 2024 demonstrates strong market traction, potentially bolstered by its offerings in the weight loss and wellness space.
InvestingPro Tips highlight that HIMS has seen a strong return over the last month, with a 12.79% price total return. This recent performance could be reflecting investor optimism about the company's position in the evolving regulatory environment for weight loss drugs. Additionally, the tip that net income is expected to grow this year suggests that HIMS may be well-positioned to capitalize on market opportunities.
It's worth noting that HIMS is trading at a high P/E ratio of 241.41, indicating investor expectations for future growth. While this valuation is steep, it may be justified if the company can continue its impressive revenue growth trajectory and benefit from potential market expansions in the weight loss medication sector.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips that could provide deeper insights into HIMS's financial health and market position.
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