By Mackenzie Tatananni
Shares in Hims & Hers Health saw their largest same-day jump on record Monday after the beleaguered telehealth company struck an agreement with Novo Nordisk. Still, analysts aren't rushing to recommend the stock.
Hims announced Monday that it had hashed out a compromise with the Danish drugmaker to sell Novo's branded weight-loss drugs through its digital platform in place of compounded GLP-1s.
Weight-loss drugs -- a catchall term for Novo's medications for diabetes and chronic weight management -- have been at the center of a continuing feud between the companies. Novo and Hims initially partnered to sell Wegovy last year, but the partnership collapsed when Hims continued to offer cheaper compounded GLP-1 drugs, commonly referred to as "copycats" or "knockoffs."
The latest development removed lingering pressure from the shares, and what followed was a flood of rating changes and price target hikes. However, most analysts fell short of giving Hims their stamp of approval.
One analyst who opted to remain on the sidelines was Citi Research's Daniel Grosslight, who upgraded Hims to Hold from Sell with a $24 price target, up from $13.25.
Shares were extending gains from the previous session as they climbed 3.8% to $23 on Tuesday. Hims stock has cratered 29% this year against a 0.3% decline for the benchmark S&P 500, largely due to its ongoing battle with Novo and increased regulatory scrutiny.
The rating change wasn't a resounding endorsement just yet, and that's because the path forward is clouded with uncertainty. Details around pricing remain scant, but Grosslight believes they will likely carry a $100 premium to the cash pay price through Novo's direct-to-consumer pharmacy, NovoCare. The higher price tag will likely include 24/7 access to a provider and nutritional guidance.
While the development "significantly derisks the story," especially considering Novo's agreement to drop a patent infringement lawsuit, Grosslight expects Hims to suffer a sizable drop in revenue and adjusted earnings before interest, taxes, depreciation and amortization.
Without the ability to sell compounded GLP-1s, Hims will need to generate a roughly 70% increase in annual subscriptions to make up lost ground, "which we think is unlikely," Grosslight wrote.
While removal of the legal overhang allows management to concentrate on new business verticals as well as international expansion, Grosslight is opting to remain Neutral-rating until he sees renewed growth from those verticals and markets.
BofA analyst Allen Lutz similarly raised his rating on the shares to Neutral from Underperform with a $23 price target, up from $12.50. Novo's agreement to drop the lawsuit is "a clear positive in our view as it removes litigation and related credit risk," Lutz wrote.
He noted that BofA remains "significantly below the Street" with respect to revenue and Ebitda estimates for 2026 and 2027, though he conceded that the risk/reward ratio is more balanced currently.
Lutz assumes Ebitda contributions could be 50% lower than contributions from compounded semaglutide on a per-script basis. This assumes a $100 platform fee, in between competitors Weight Watchers and Ro.
There are some reasons to be upbeat. Marty Makary, the commissioner of the Food and Drug Administration, indicated after the announcement that the potential for litigation or regulatory penalties from the FDA and Justice Department is low moving forward.
But Lutz is paying attention to the bears as well. In addition to concern around a downside revision risk to earnings growth, Hims is grappling with "significant competition in its core verticals where growth has slowed dramatically over the past few years," the analyst noted.
Before the introduction of GLP-1s, the company's Ebitda was near break-even, "and the rapid uptake of GLP-1s catalyzed the profitability the company sees today," Lutz wrote. The bottom line: The shift to branded weight-loss drugs will pressure Ebitda in the near term.
Deutsche Bank analyst George Hill reiterated a Hold rating on the shares while slightly raising his price target to $28 from $25. In his view, the partnership with Novo could spell a "reversal of fortune" for Hims.
"While we have many questions surrounding the implementation of this relationship, and the companies' pricing strategies going forward, this deal would seem to remove the biggest near-term overhangs on the shares, " Hill wrote.
But there's a reason he isn't moving off the sidelines just yet. Hims faces investigations from other federal agencies beyond the FDA and Justice Department, "and what happens to those processes is an open question," Hill wrote.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 10, 2026 12:05 ET (16:05 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments