On Friday, shares of Hims&Hers Health Inc (NYSE:HIMS) dropped over 20% following an FDA announcement that the supply shortage of Novo Nordisk (NYSE:NVO)'s weight loss and diabetes drugs was ending. Due to this, the sale price and availability of Ozempic and Wegovy are impacted, which disallows Hims and Hers from selling exact replicas of the semaglutide drugs at a lower price.
In response to the news, BofA analyst Allen Lutz maintained an Underperform rating and a price target of $21.00, citing the news as a "clear negative" for Hims&Hers' GLP-1 opportunity.
The analyst stated, "Today’s news is a clear negative for HIMS and indicates the duration of the semaglutide opportunity is likely limited to 2025, creating a potentially material headwind to growth in 2H. Based on the FDA’s recent policies on the resolution of the tirzepatide shortage, we expect state-licensed pharmacies under 503A to have 60 calendar days and 503B facilities to have 90 calendar days from today’s determination to stop manufacturing compounded semaglutide."
Lutz iterated that semaglutide drugs are expected to account for nearly half of gross sales for the company in Q2. He also cited that the company's core product line has decelerated to represent only 30% gross sales as of January.
Leerink Partners analyst Michael Cherry answered the news with similar concern, stating, "For HIMS (MP) and the broader GLP-1 compounding space, this development starts the clock on having unfettered market access to the patented drug."
The analyst appeared skeptical of the stock's immediate future, adding, "From here, we do see potential for a reset in the stock after it had been clearly driven up by excitement over the broader weight loss opportunity." Cherry reiterated a price target of $24.00 and a Market Perform rating, and advocated for understanding of Hims and Hers' potential legal pathway.
It should be noted that Hims and Hers stock had jumped 43% in the week prior to the announcement, which has been attributed to the acquisition of Tybre Labs and a controversial Super Bowl ad. Investors will be following closely, as the company is set to report earnings on February 24, 2025.
