BofA says Hims & Hers should be able to navigate environment despite volatility

BofA analyst Allen Lutz notes that yesterday, the U.S. Food and Drug Administration announced reforms to direct-to-consumer advertisements. The FDA will now require drug companies to include full safety warnings during DTC ads and will expand regulatory oversight to include social media promotional activities. The FDA will now require advertisers to present all of this information within an advertisement – which could make TV advertisements longer, clunkier, and less appealing for drug manufacturers and online pharmacies. At a minimum, this will make DTC advertisements on social media platforms like Facebook (META) or Instagram less appealing to consumers. Given the significant competitive pressures taking place across sexual health, hair loss, and weight loss, these industry changes are likely to make new customer conversions more challenging, the firm argues. Overall, Hims & Hers (HIMS) should be able to navigate this environment given its strong brand equity and first-mover advantage, but BofA would expect continued volatility in the near term. The firm keeps an Underperform rating on Hims & Hers with a price target of $28 on the shares.