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Hims & Hers Health (NYSE:HIMS) traded lower premarket Wednesday as Citi downgraded the stock, citing its recent upsurge following an announcement to sell cheaper versions of Novo Nordisk’s (NVO) popular weight loss therapy, semaglutide.
Citi analyst Daniel Grosslight noted that Hims has added 20% since Monday, when the company announced its decision to sell so-called compounded versions of the GLP-1 receptor agonist, which is currently in short supply amid soaring demand.
While there is limited information on the move, with the company adding roughly $760M of enterprise value, there is “little room for upside,” Grosslight wrote as he downgraded Hims (HIMS) to Neutral from Buy.
“The bigger question in our mind, though, is what happens after the branded GLP-1s come off the shortage list?” the analyst added. “At that point, in our view, it will be much harder for HIMS to compound, creating significant uncertainty around the durability of this earnings stream.”
However, Grosslight raised his price target on HIMS to $20 from $16 per share to reflect the new earnings stream linked to the company’s GLP-1 offerings.
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