Citi Sticks to Sell Rating on Hims & Hers (HIMS) Stock as FDA Ruling Clouds Outlook

Four-star-rated analyst Daniel Grosslight at Citi reiterated his Sell rating on Hims & Hers Health (HIMS) stock yesterday, citing increased uncertainty following the recent FDA ruling on weight loss drugs. Grosslight’s price target of $27 implies a downside of 22% from the current levels. Overall, HIMS stock has a Hold rating from analysts amid concerns over its weight loss business. HIMS stock has declined over 20% in the last 30 days.

Citi Remains Bearish on HIMS Stock – Here’s Why

Grosslight noted that the compounding group Outsourcing Facilities Association (OFA) has filed a notice to appeal a recent ruling by the U.S. District Court for the Northern District of Texas. The ruling upheld the FDA’s decision to remove tirzepatide, a weight-loss drug, from the shortage list.

In context, the District Court ruled last week that OFA can’t stop the FDA from declaring the shortage over. With no legal barriers, the FDA could end all GLP-1 shortages. Interestingly, the shortage allows compounders like Hims & Hers to sell their GLP-1 drugs. If the FDA declares the shortage over, they must stop. With the FDA recently ending the semaglutide shortage, a similar ruling on tirzepatide could further hurt Hims & Hers’ business.

The analyst added that the OFA is expected to challenge the ruling on four key grounds. First, it will argue that the FDA should have followed a formal process that includes public participation before making its decision. Second, the OFA contends that the FDA ignored evidence indicating that tirzepatide remains in short supply. Third, it claims that the agency’s decision was not based on sound reasoning. Lastly, the OFA believes the FDA relied too heavily on data provided by the drug’s manufacturer, Eli Lilly (LLY).

However, Grosslight believes that the district court provided strong legal reasoning for its ruling. As a result, they see little chance of the appeal changing the outcome. Consequently, he maintained his Sell rating on HIMS stock.

Is HIMS Stock a Buy, Sell, or Hold?

Overall, Wall Street is cautious on HIMS stock, with a Hold consensus rating based on four Buys, six Holds, and two Sells. The average HIMS stock price target of $45.08 implies a 31% upside potential.

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