Bank of America has revised its rating on Hims & Hers Health Inc, moving the telehealth provider from Underperform to Neutral following a settlement with Novo Nordisk that removed a significant legal risk. The brokerage also lifted its price objective to $23 from $12.50, a level roughly consistent with recent trading in the stock.
The upgrade was prompted by a new arrangement with Novo Nordisk, the maker of the weight-loss drug Wegovy, under which Novo Nordisk agreed to drop its lawsuit against Hims & Hers. Bank of America said the settlement eliminates litigation and related credit concerns that had been a central reason for its previous cautious stance on the company.
Even with the legal overhang resolved, the analysts at Bank of America said the stock now appears to offer a balanced risk-reward at current market levels. The firm left its revenue and earnings projections for 2026 and 2027 below broader market expectations, signaling continued conservatism on top-line and profit growth for those years.
Crucially, Bank of America reduced its forecasts for earnings before interest, taxes, depreciation and amortization for 2026 and 2027 to reflect Hims & Hers' move away from providing compounded GLP-1 drugs toward filling branded prescriptions supplied by pharmaceutical manufacturers. Under the terms of the new arrangement, the brokerage expects the company to realize lower profit per prescription relative to the economics it previously achieved with compounded semaglutide products.
The analysts estimate that earnings contributions from branded GLP-1 prescriptions could be about 50% lower per prescription compared with the company's prior model. That reduction in per-prescription profitability is a principal reason for the lowered earnings forecasts for the mid-2020s.
Bank of America also noted that the shift toward branded drugs could lower certain costs over time. With less need to develop or maintain its own supply chain for compounded products, Hims & Hers may be able to reduce operating and capital expenditures tied to in-house manufacturing and logistics.
The brokerage highlighted potential sources of upside that could improve the company's outlook. These include further partnerships with pharmaceutical companies, such as potential deals with additional manufacturers, stronger retention of GLP-1 patients, or higher overall demand for branded prescriptions.
Context and takeaways
- Legal risk tied to Novo Nordisk litigation has been resolved through a settlement, which prompted the rating upgrade.
- Price target was raised to $23, while 2026-27 revenue and earnings estimates remain conservative.
- Switching from compounded semaglutide to branded GLP-1 prescriptions is expected to lower profit per prescription by about half, though it may reduce supply-chain related spending.