Bank of America remains bearish on telehealth firm Hims & Hers (HIMS) due to “competitive pressures in the core business.” Analyst Allen Lutz reiterated a Sell rating on HIMS stock with a price target of $28, indicating a steep downside risk of about 42% from current levels. Interestingly, Hims & Hers stock surged 8.2% on Thursday, as a judge dismissed Eli Lilly’s lawsuit (LLY) against another telehealth firm, Willow Health, for selling copycat versions of its GLP-1 drugs.
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The ruling was welcomed by HIMS investors, as the company faces similar risks regarding its short-lived partnership with Novo Nordisk (NVO).
Here’s Why Bank of America Has a Sell Rating on HIMS Stock
Bank of America highlighted that following the success of Hims & Hers, the number of competitors in the direct-to-consumer (DTC) channel has grown massively. For instance, Remedy Meds was launched in 2024 and already expects to generate $450 million of GLP-1 revenue this year.
Given the spike in competition in the sexual health, hair loss, and weight loss DTC market, Lutz sees the possibility of continued consolidation as companies seek economies of scale and broader distribution. Consequently, the 4-star analyst expects near-term competitive pressures to impact the growth and margin of incumbents in the short term, which could be a headwind to HIMS.
Nonetheless, in the intermediate to long term, Lutz believes that HIMS is well-positioned to maintain its leading position, backed by its brand equity and first-mover advantage. The analyst stated that he continues to monitor keyword search trends, broader advertising prices, and the impact on unit economics.
Is HIMS Stock a Good Buy?
Currently, Wall Street is sidelined on Hims & Hers Health stock, with a Hold consensus rating based on two Buys, seven Holds, and two Sell recommendations. The average HIMS stock price target of $47.80 indicates that the stock is fully valued at current levels. Despite the 24% pullback over the past month, HIMS stock is up about 99% year-to-date.
