Hims & Hers (HIMS) stock has taken a significant hit, dropping more than 25% in recent sessions due to a patent-infringement lawsuit filed by Novo Nordisk (NVO). This legal action specifically targets the company’s semaglutide offerings, causing investors to react negatively to the news.
The situation worsened for HIMS when the U.S. Food and Drug Administration (FDA) cracked down on unapproved GLP-1 compounding, leading the company to abruptly abandon its new $49 oral Wegovy alternative. As a result, year-to-date, Hims & Hers stock has plummeted by nearly 45%, pushing its relative strength index (14-day) into deeply oversold territory.
Analysts at Bank of America (BofA) are advising caution when considering buying HIMS stock on recent weakness. They believe that the Novo Nordisk lawsuit poses a significant risk that the market has not fully priced in yet. Additionally, the transition to a hostile legal environment, along with a Department of Justice referral, suggests that the compounding business that has been a high-margin growth engine for Hims & Hers may now be unsustainable.
BofA has maintained its “Underperform” rating on Hims & Hers and lowered its price target to $13, indicating a potential downside of another 32% from the current levels. The analysts also highlighted the need for a complete re-evaluation of the company’s premium due to potential legal defense costs and the possibility of a permanent injunction on all GLP-1 products.
Furthermore, pivoting away from high-margin compounded drugs will require HIMS to invest heavily in talent and supply chain verticalization. While this move could lead to negative earnings revisions in 2026, it may be necessary for the company’s long-term sustainability.
It’s important to note that NVO’s testing reportedly discovered impurities of up to 86% in certain compounded samples, which could severely damage the HIMS brand and lead to a mass exodus of its subscriber base. From a technical standpoint, Hims & Hers shares are trading below key moving averages, indicating that the downward momentum may continue in the near future.
Despite the negative outlook from BofA, other Wall Street firms believe that the ongoing selloff of HIMS shares is overdone. According to Barchart, the consensus rating remains at a “Hold,” with a mean target price of around $39, suggesting a potential upside of 100% from current levels.
In conclusion, the recent challenges faced by Hims & Hers have put the company in a precarious position. Investors should consider the potential risks and uncertainties surrounding the stock before making any investment decisions.
