The stock of telehealth provider Hims & Hers is caught in a classic Wall Street tug-of-war. On one side, CEO Andrew Dudum is touting explosive early demand for the weight-loss drug Wegovy. On the other, analysts at Bank of America are slashing targets, warning that the very success of this new strategy is set to crush profitability. The company’s shift from selling cheap, compounded alternatives to premium brand-name medications is proving to be a double-edged sword.
Dudum recently announced on social media platform X that the company is already barreling toward a monthly run rate exceeding 100,000 Wegovy prescriptions. This surge comes less than two weeks after Hims & Hers shipped its first doses under a new partnership with Novo Nordisk. The deal also includes providing Ozempic for type-2 diabetics. The offering spans various dosages from 0.25 to 2.4 milligrams and includes pill-based formulations. This operational momentum briefly fueled a 7% pre-market stock gain recently.
However, the celebration on the trading floor was short-lived. BofA Securities has responded by cutting its price target for Hims & Hers from $23 to $21, maintaining a Neutral rating. The core of their skepticism is a brutal margin squeeze. The bank estimates the EBITDA contribution from the GLP-1 segment could plummet by approximately 50% this year alone. By moving patients from low-cost compounds to branded drugs like Wegovy, which costs subscribers $149 per month, the company’s bottom line is taking a direct hit.
BofA’s analysis suggests only 40% to 50% of existing subscribers will convert to the pricier branded products, with another 5% to 10% potentially staying on compounded versions. This transition is expected to generate quarterly GLP-1 revenue between $60 million and $90 million. Consequently, the bank has also reduced its 2026 GLP-1 revenue forecast to $516 million, down from a previous estimate of $577 million. Its 2026 EBITDA outlook now sits 21% below the broader market consensus.
Should investors sell immediately? Or is it worth buying Hims & Hers?
International expansion, another key growth pillar, presents its own challenges. Hims & Hers aims to grow its overseas business to over $1 billion within three years, driven largely by its Australian platform, Eucalyptus. Yet BofA notes a problematic detail: around 90% of Eucalyptus’s revenue comes from selling branded GLP-1 products. This reliance could further pressure the group’s consolidated EBITDA margin by an additional one to two percentage points.
The conflicting signals have left the market deeply divided. Not all analysts share BofA’s caution. Barclays raised its price target to $29 last month, citing the removal of legal uncertainty following the Novo Nordisk settlement. Needham analysts also see upside, believing demand for Wegovy pills in the direct-to-consumer market is underestimated.
This analyst split is reflected in the stock’s volatile performance. Trading around $20, the shares have shed nearly 39% since the start of the year. With an EV/EBITDA multiple of 26.4x, the valuation remains well above BofA’s revised target multiple of 21.5x. The gap between optimistic and skeptical forecasts remains wide.
For Hims & Hers, the coming quarters will be a definitive test. The company must demonstrate that the prescription volumes championed by Dudum can not only be sustained but also fully offset the significant profitability erosion from abandoning its lucrative compounded drug business. The path to growth, it seems, is paved with thinner margins.
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