Hims & Hers Health (NYSE: HIMS) tumbled 5.6% through 12:20 p.m. ET Thursday after Bank of America analysts gave mixed messages on the stock this morning.
Raising its price target on the shares to $21, reports The Fly, BofA nonetheless reiterated an "underperform" (i.e., sell) rating on Hims & Hers stock. Investors are taking the hint, and doing just that.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
Why BofA worries about Hims & Hers
Hims & Hers stock has been a mega-outperformer for investors, growing more than 600% over the past year, largely on the back of its compounded semaglutide products that mimic the effect of Ozempic and similar weight loss drugs from Big Pharma companies like Novo Nordisk and Eli Lilly. But Hims & Hers' opportunity, which emerged as Novo and Lilly were unable to satisfy demand for GLP-1 products, has also created a risk for the stock, reports BofA.
On the one hand, the banker sees "upside" to Hims & Hers' Q4 revenue estimates. BofA furthermore predicts that Q1 2025 guidance will be "meaningfully" ahead of analyst expectations -- that Hims & Hers will guide to an earnings beat.
The problem is how Hims & Hers makes that happen.
BofA estimates that by Q2 2025, GLP-1 sales could comprise more than 50% of Hims & Hers' sales, overweighting the company's reliance on just one product for half its business. Since it's only a matter of time before Novo and Lilly have scaled up enough that there will be no need for compounders like Hims & Hers to make up the deficit of GLP-1 supply and that business disappears, BofA predicts sales could soon fall off a cliff.
Is Hims & Hers stock a sell?
But here's the curious thing: Most Wall Street analysts see Hims & Hers revenue continuing to grow going forward, and indeed roughly doubling in size by 2027. Still, even optimists only forecast $0.86 in earnings that year, which values the stock at more than 77 times earnings three years away.
That's quite a high price to pay. I agree with BofA that it makes Hims & Hers stock a sell.
Should you invest $1,000 in Hims & Hers Health right now?
Before you buy stock in Hims & Hers Health, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hims & Hers Health wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $853,275!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 7, 2025
Bank of America is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
