Freedom Broker says buy Hims & Hers after cancellation of tie-up with Novo Nordisk

Freedom Broker now recommends clients buy shares of Hims & Hers Health, a telehealth company, in the wake of a recent dip. The mid-cap stock has lost 35% of its market value due to a canceled partnership with pharma giant Novo Nordisk, which alleges that Hims & Hers put patient safety at risk through “deceptive” marketing and sold a knockoff version of its drug Wegovy. Despite this, Freedom Broker analysts think Hims & Hers stock will bounce back quickly. 

Freedom Broker has assigned a "buy" rating to Hims & Hers with a target price of $56 per share, indicating 15% upside, according to a note seen by Oninvest. 

Hims & Hers is currently trading at $49.80 per share, 22% off its mark on June 20, the last trading day before the blowup with Novo Nordisk. Freedom Broker argues the stock price will quickly recover on the back of consistently strong operating performance and high interest from retail and institutional investors. In addition, the company's financials are getting better and better. Meanwhile, in July or August, Hims & Hers will go international, launching a pilot project in the UK.

Hims & Hers stock tanked almost 35% to $41.90 per share on June 23, hit by news of the conflict with Novo Nordisk. 

The Danish drug maker said it will no longer provide Hims & Hers direct access to Wegovy through its pharmacy NovoCare. It alleges "deceptive promotion and selling of illegitimate, knockoff versions of Wegovy that put patient safety at risk."

The companies had announced the partnership only in late April. It had allowed Hims & Hers to sell the weight-loss drug to U.S. customers at about a third of its retail price without insurance coverage.

In response to the cancellation of the partnership and Novo Nordisk's allegations, Hims & Hers CEO Andrew Dudum announced the company will continue offering cheaper compounded versions of GLP-1 weight-loss drugs.

The telehealth service makes money from other drugs beyond weight-loss medications, like those for anxiety, insomnia, impotence, and skin problems. Still, “Even with all these revenue streams, the bigger concern (rightfully so) is the ability for these revenue streams to fill the expected hole that the end of the NovoCare partnership creates,” Michael Cherny, a senior research analyst at Leerink Partners, said in a note

A different view is voiced by Aaron DeGagne, a senior analyst of healthcare at market data and financial research firm PitchBook: “The termination of this partnership suggests that Novo still views Hims’ marketing and sales tactics as a threat to branded Wegovy and indicates Novo considers Hims more of a competitor than a true partner."

The stock has more than doubled since the beginning of the year. Of the 15 analysts who track Hims & Hers, eight have a "hold" recommendation, four have a "buy," two an "outperform," and one a "sell," according to MarketWatch. The average target price is $46.20 per share, 6% below current quotes. 

The AI translation of this story was reviewed by a human editor.