Low-cost healthcare services provider Hims & Hers Health’s (HIMS) shares extended their prior-day 13.72% rally, jumping another 10% on Thursday afternoon. This came as Bank of America (BAC) described the move by the U.S. government to let compounding pharmacies produce certain peptides to curb black market trade as “incrementally positive” for the company.
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U.S. Eyes Easing Rules on Peptide-Based Treatments
Peptides are short chains of amino acids that form the building blocks of protein in the body. They play a key role in several popular weight-loss drugs, but U.S. regulators in 2023 prohibited compounding pharmacies from producing them over safety concerns.
On Wednesday, U.S. Health Secretary Robert F. Kennedy Jr. signaled the continued interest of President Donald Trump’s administration to ease restrictions on peptide injections. Kennedy Jr., in a post on X, noted that the U.S. Food and Drug Administration (FDA) is taking a “long-overdue action.”
The government official in February had announced plans to restore legal access to about 14 of these 19 peptides for compounding pharmacies. Now, the FDA in July intends to commence an independent advisory committee review of the evidence on several peptides.
Bank of America Sees Upside in Peptides for Hims & Hers
Reacting to the update, Bank of America analyst Allen Lutz kept his Hold rating on HIMS but raised his HIMS target from $21 to $25, implying about 5% downside risk. Lutz clarified that while the move by the FDA is a small, initial step, it also opens a new optional revenue stream for Hims & Hers.
The move also gives Hims & Hers — which is shifting its business from compounded to branded weight-loss drugs — the opportunity to repurpose its GLP-1 capacity toward other peptides, the analyst further argued.
GLP-1, or glucagon-like peptide-1, is a hormone that manages blood sugar and appetite and plays a key role in obesity and diabetes management medications. Lutz previously predicted a 31% drop in Hims & Hers’ GLP-1 franchise from the shift.
Is HIMS Stock a Strong Buy?
Across Wall Street, Hims & Hers’ shares remain a Moderate Buy based on analysts’ consensus rating. This breaks down into four Buys and 10 Holds issued over the past three months.
Moreover, the average HIMS price target of $26.90 implies a little more than 1% upside from current trading levels.
