Hims & Hers (HIMS) Gets Good News from the FDA. Is It Already Priced in?

Hims & Hers Health, Inc. (HIMS) just caught a regulatory break from the U.S. Food and Drug Administration (FDA), but I believe the good news is already largely priced in. While the decision to remove 12 peptides from the restricted Category 2 list improves the outlook for the company’s peptides business, the current valuation already reflects much of that improvement, which is why I remain neutral on the stock

The online health platform that connects medical professionals to consumers came into the spotlight last week after the U.S. Health and Human Services Secretary Robert F. Kennedy Jr. announced the easing of restrictions, a development that seems favorable to the company. There is potential for further upside if these peptides are added to the 503A Bulks List during the July advisory committee sessions. This would enable regulated compounding by pharmacies partnered with Hims & Hers.

Hims & Hers Poised for FDA Peptide Reassessment

Although I am neutral on the prospects for Hims & Hers, I believe the company is strongly poised to capitalize on the removal of 12 peptides from the Category 2 list. In February 2025, the company acquired a peptide manufacturing facility in California to aggressively expand in this market segment. However, this business has failed to take off due to the Category 2 restrictions on popular peptides. 

The Pharmacy Compounding Advisory Committee is scheduled to meet on July 23 and 24 to evaluate the possibility of moving 12 peptides into the Bulks List. Given the high likelihood of a favorable decision, Hims & Hers will finally be able to legally produce non-GLP-1 peptides in bulk, thereby transforming itself into a mass producer and distributor of peptides.

The company has already built a massive distribution network through its telehealth platform, enabling immediate monetization of mass-manufactured peptides within the United States.

According to Grand View Research, the global peptide therapeutics market was valued at $140.9 billion in 2025 and is projected to reach $294.6 billion by 2033. Hims & Hers is ideally placed to tap this growth through its telehealth platform and nearly 2.5 million paying subscribers as of Q4 FY2025, leveraging its compounding infrastructure for peptide delivery.

The Recent Shift in GLP-1 Strategy Deserves Praise

In addition to the improving regulatory environment for peptides, the company seems well placed to leverage the expected growth in the GLP-1 market, thanks to a recent strategic shift. For the past couple of years, the company has focused on manufacturing compounded semaglutide to capitalize on shortages of popular GLP-1 drugs such as Wegovy and Ozempic. Today, the company is focused on expanding the distribution of these branded GLP-1 names, so it is actively withdrawing its compounded semaglutide products from the market.

According to CEO Andrew Dudum, Hims & Hers is preparing its telehealth platform for an influx of new weight loss drugs in the coming years. This makes sense given that more than 35 new drugs are already in Phase II and Phase III clinical trials today.

Some of the most promising drugs in the pipeline are developed by pharmaceutical giants such as Novo Nordisk (NVO), Amgen Inc. (AMGN), and Eli Lilly (LLY). Given this, the company’s strategic shift to partner with pharma giants seems prudent, as it aims to make the most of the GLP-1 wave.

Investors Should Monitor a Few Challenges

Despite the promising developments discussed earlier, I believe Hims & Hers faces several challenges that need to be accounted for. These challenges are behind my neutral stance on Hims. First, the company is likely to experience margin dilution over the next few years as it expands into international markets.

During the Q4 earnings call, CFO Yemi Okupe confirmed that the company is taking a growth-first approach in global markets, with a primary goal of capturing market share. This will come at the cost of margin dilution.

Second, margins will take a hit from the company’s investments in expanding its distribution capabilities. Given that it is transforming its business to diversify into branded GLP-1 drug sales, Hims & Hers is forced to invest aggressively in its distribution network. In Q4 2025, the company invested over $300 million to expand its physical footprint to over 1 million square feet in the United States, including an over $200 million facility in Ohio. These investments, although necessary to secure its future as a key distributor of branded drugs, will compress margins in the next few years.

I believe Hims & Hers trades at a forward P/E of around 60x, which fairly reflects growth but is vulnerable to further multiple contraction amid margin compression risks from GLP-1 scaling and investments.

Is Hims & Hers a Buy, According to Wall Street Analysts?

Based on 14 Wall Street analysts’ ratings, the average Hims & Hers price target is $27.40, which implies a 5.55% downside from the current market price.

Although analyst ratings currently imply downside potential, I believe positive revisions are likely as we inch closer to the Pharmacy Compounding Advisory Committee meeting in late July. Some early momentum is already building. Soon after the FDA’s decision to evaluate peptides, Bank of America (BAC) analysts raised their price target for Hims from $21 to $25, citing the positive impact expected from this reclassification. BofA analysts believe that this is the first step in the bulk-list addition process. More positive analyst actions are likely.

Takeaway

Hims & Hers stock gained momentum last week on the back of a favorable FDA decision. The company seems well-positioned to capitalize on the improving regulatory environment for popular peptides, having bet on this outcome last year by acquiring a peptide production facility in California. The strategic shift to embrace branded GLP-1 drugs also seems prudent amid the stellar growth in demand expected for this category.

Although there are many positives, I believe its current valuation leaves little margin of safety for investors.