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Citi downgrades Hims & Hers stock citing GLP-1 launch risks

EditorEmilio Ghigini
Published 22/05/2024, 09:52
HIMS
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On Wednesday, Citi revised its stance on NYSE:HIMS stock, downgrading the company from Buy to Neutral, while simultaneously raising the price target to $20.00 from the previous $16.00. The adjustment follows a recent announcement by Hims & Hers regarding the launch of a new GLP-1 program.

The company's approach to the GLP-1 launch was initially met with concern due to potential regulatory and legal risks. However, after discussions with the management, Citi acknowledged the company's cautious and compliant strategy.

Hims & Hers have partnered with a notable 340B manufacturer for the production of Semaglutide, an active pharmaceutical ingredient (API) similar to that used by Novo Nordisk (NYSE:NVO).

Management assured that the production process for Semaglutide is relatively straightforward and that their manufacturing partner is capable of meeting the anticipated high demand for the product. There are no apparent shortages of API, which supports the program's launch.

Despite these positive aspects, Citi's decision to downgrade comes after the company's stock value increased by 20% following the GLP-1 announcement. This surge added approximately $760 million to Hims & Hers' enterprise value.

According to Citi, this leaves limited potential for further stock appreciation. The firm is now taking a more cautious stance, waiting for additional details on the economics and sustainability of the GLP-1 program before reconsidering its rating.

InvestingPro Insights

Following Citi's recent rating adjustment on Hims & Hers, the InvestingPro platform offers additional insights into the company's financial health and market performance. With a significant market capitalization of $3.77 billion, Hims & Hers stands out in its sector. The company has experienced a notable revenue growth of 55.65% over the last twelve months as of Q1 2024, highlighting a robust upward trajectory in sales. This is further bolstered by a quarterly revenue growth of 45.81% in Q1 2024, signaling sustained momentum.

InvestingPro Tips indicate that analysts are optimistic about the company's future, with net income expected to grow this year and three analysts having revised their earnings upwards for the upcoming period. Additionally, Hims & Hers has demonstrated a strong return over the past week, month, and three months, with a 26.88%, 47.81%, and 85.82% total price return respectively. This performance is indicative of the market's positive reception to the company's strategic initiatives, such as the new GLP-1 program.

For readers interested in a deeper analysis, there are additional InvestingPro Tips available, including insights on the company's debt levels, liquidity, and profitability projections. To access these valuable tips, visit https://www.investing.com/pro/HIMS and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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