Canaccord Genuity reduced its price target on Hims & Hers (NYSE:HIMS) to $30 from $68 but left its Buy recommendation in place after the company was named in litigation brought by Novo Nordisk.
On Monday, Novo Nordisk filed suit against Hims & Hers, accusing the telehealth provider of patent infringement tied to what the complaint describes as the unlawful mass marketing of unapproved versions of Novo’s semaglutide medicines. The legal action follows a short-lived announcement by Hims that it would make a compounded oral semaglutide product available on its platform last Thursday, a decision the company subsequently reversed.
Regulatory pressure has escalated in parallel. The Food and Drug Administration said it intends to restrict GLP-1 active pharmaceutical ingredients when those ingredients are intended for non-FDA-approved compounded drugs that are being mass-marketed by companies, and it specifically named Hims & Hers in that context. That regulatory scrutiny has introduced another source of uncertainty for Hims’ compounded GLP-1 business.
Maria Ripps, an analyst at Canaccord Genuity, said the lawsuit increases operational uncertainty but noted the firm is not yet changing its underlying estimates. Since the February 5 announcement, the shares have fallen roughly 20%, which Canaccord says has reduced the company's revenue multiple from 2.3x to 1.9x. Ripps added that a substantial portion of the legal risk may already be reflected in the share price, although ongoing litigation could sustain elevated volatility in Hims & Hers stock.
Market watchers have responded unevenly to the regulatory and legal developments. Hims halted sales of its compounded semaglutide pill after the FDA increased scrutiny of its weight-loss medicine offerings; that scrutiny resulted in a referral to the Department of Justice for potential violations.
Brokerage responses have varied:
- BofA Securities cut its price target to $13 from $21 and maintained an Underperform rating, citing the patent infringement lawsuit as a factor.
- Needham preserved a Hold rating, signaling continued concern about regulatory oversight.
- BTIG retained a Buy rating despite the discontinued GLP-1 pill program.
- Morgan Stanley kept an Equalweight rating and a $40 price target, while acknowledging the FDA's intent to act against non-FDA-approved GLP-1 drugs.
- BofA had earlier reduced its target to $21 as a result of FDA restrictions on GLP-1 active ingredients.
Collectively, these actions underline the legal and regulatory headwinds confronting Hims & Hers and the broader implications for its compounded GLP-1 efforts. Analysts differ in how they balance the potential upside of the company's broader telehealth offerings against the immediate uncertainty stemming from litigation and regulatory enforcement.
Context and implications
The combination of a patent infringement lawsuit from a major pharmaceutical manufacturer and explicit FDA commentary naming the company heightens near-term risk for Hims’ GLP-1 program. While some brokerages have sharply lowered price targets and ratings, others have maintained more constructive stances, reflecting divergent assessments of how materially the legal and regulatory issues will affect the company's overall revenue trajectory.
At present, Canaccord is taking a middle course: recognizing elevated uncertainty with a substantially lower price target but retaining a Buy rating and leaving estimates intact. The situation remains fluid and likely to influence trading volatility until litigation and regulatory outcomes become clearer.