Upgrade from Bank of America#
Bank of America has upgraded Hims & Hers Health Inc from “Underperform” to “Neutral.” This change comes after a new agreement with Novo Nordisk, a major pharmaceutical company, which has removed a significant legal risk that had previously impacted Hims & Hers' stock performance.
New Partnership Details#
The upgrade follows a partnership between Hims & Hers and Novo Nordisk, known for its weight-loss drug Wegovy. As part of this agreement, Novo Nordisk has dropped a lawsuit against Hims & Hers. Bank of America noted that this settlement alleviates concerns related to litigation and credit, which had influenced their earlier cautious outlook on the telehealth company.
Adjusted Price Objective#
Bank of America has also raised its price target for Hims & Hers from $12.50 to $23, aligning it more closely with the stock’s recent trading levels. However, the analysts caution that the stock's risk-reward scenario now appears balanced at these levels, indicating that potential gains may be offset by risks.
Earnings Forecasts and Future Outlook#
Despite the upgrade, Bank of America has lowered its earnings forecasts for Hims & Hers for 2026 and 2027, suggesting that the company’s shift from compounded GLP-1 drugs to branded prescriptions could lead to lower profit margins. Analysts estimate that earnings from branded GLP-1 prescriptions may be about 50% lower per prescription compared to previous products.
However, this transition could also lead to reduced costs over time, as Hims & Hers may scale back investments in building its own supply chain, potentially lowering operating and capital expenses. Bank of America sees potential for growth through additional pharmaceutical partnerships, improved retention of GLP-1 patients, or increased demand for branded prescriptions.