Hims & Hers Health (HIMS -7.34%) stock slid 7.4% through 11:10 a.m. ET Tuesday after Bank of America raised its price target on the pharmaceuticals stock in the worst way possible.
BofA added only $1 to its Hims & Hers price target, making it $22 a share.
Which is actually $10 less than Hims & Hers stock is worth today.
NYSE: HIMS
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What BofA thinks about Hims & Hers
Bank of America also reiterated that it thinks Hims & Hers stock is a sell, by the way, or as the banker puts it, an "underperform."
Explaining its reasoning in a note on The Fly this morning, BofA noted that GLP-1 sales growth is accelerating, rising 124% year over year in February, and accounting for 45% of Hims & Hers' total revenue that month. That's good enough for an extra $1 worth of price target, apparently -- but not good enough to get BofA to buy the stock.
Why not?
Well, BofA didn't say exactly, but as I argued yesterday, February's spike in sales owed primarily to heavy advertising Hims & Hers undertook during the Super Bowl last month. And yet, Hims & Hers cannot expect to continue enjoying similar levels of sales of its GLP-1 products, because the FDA is rolling out declarations that GLP-1 deficits are ending, and with them, the need to allow drug compounding companies like Hims & Hers to produce duplicates of the patented drugs of companies like Eli Lilly and Novo Nordisk.
What this means for Hims & Hers Health stock
Long story short, the windfall profits Hims & Hers enjoyed in quarters past are going away, and that's going to pose a headwind to further growth.
The question now is whether Hims & Hers stock costing 65 times trailing earnings is still worth buying, if growth is going to slow. Bank of America doesn't seem to think it is, or at least, not at the current stock price. If Hims & Hers stock drops into the low $20s, though, that answer may change.
