It was a huge day for Hims & Hers Health (NASDAQ:HIMS) as the online pharmacy opened up a new product line: discounted weight loss drugs. Not only is this access to a new supplier but Hims & Hers will also have an edge in pricing. That was sufficient for investors to buy in hard, sending shares up over 35% at the time of writing.
Hims & Hers will be offering “compounded GLP-1 weight loss injections,” which only adds to an array of highly popular treatments, including medication for hair loss and erectile dysfunction. The GLP-1 drug addition, meanwhile, will likely only make Hims & Hers a more attractive draw, especially considering the recent supply constraints of GLP-1 drugs.
Hims & Hers looks to make it easy to obtain such medications through a “licensed health-care provider” who will be available on the site. The provider can issue prescriptions, which are then filled by the platform itself. The drugs will be available once the supply is “consistently available,” reports note.
Undercutting with Loopholes
Hims & Hers looks to offer the GLP-1 injections for $199, which is actually an 85% discount over typical prices on GLP-1 drugs. The reason that Hims & Hers can offer those steep discounts is thanks to a loophole in American drug law that allows for “compounding.” In compounding, pharmacies can make a version of a drug when there are shortages in play, which we’ve already seen going on right now.
Compounding can also be used to make a new version of a drug that removes a potential allergen from the mix. By taking advantage of compounding rules, Hims & Hers can roll out their own version and sell into a market that’s starving for new supply.
Is Hims & Hers Stock a Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HIMS stock based on eight Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 106.74% rally in its share price over the past year, the average HIMS price target of $16.63 per share implies 13.07% downside risk.
Is It Wise to Allocate $1,000 Toward HIMS Stock Right Now?
Before you hurry to invest in HIMS, think about the following:
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