BofA keeps an Underperform rating on Hims & Hers with a $22 price target after the company indicated it is adding a branded version of Eli Lilly’s (LLY) Zepbound to its platform. The firm does not expect Hims & Hers to sell a material amount of Zepbound on its platform. Selling branded drugs through the platform would generate typical mail pharmacy margins of 2%-4%, which is significantly lower than the 80% Hims & Hers currently generates, the analyst tells investors in a research note. Further, CVS Health (CVS) and Walgreens (WBA) have talked about generating negligible gross margins on weight loss drugs, BofA adds. The firm thinks Hims & Hers will generate “immaterial” revenue from Zepbound, even over an extended period of time.
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