BoA has the skinny on Hims & Hers stock — and it’s not pretty

Telehealth company Hims & Hers (HIMS) surged Tuesday after announcing it would add Eli Lilly’s blockbuster weight-loss drug Zepbound to its prescription catalog.

But according to Bank of America, the rally may be short-lived.

Despite the 5.1% gain that pushed HIMS stock to $31.05, BofA sees the stock as more appropriately valued at $22—even with Zepbound in the mix.

While most investors welcomed the news, BofA Securities said Zepbound is unlikely to move the needle on Hims & Hers’ top or bottom lines.

The problem is margins. While the company typically enjoys gross margins in the 80% range, it would be lucky to squeeze out 2–4% on Zepbound.

Then there’s the obvious question of why anyone would pay $1,899 a month for Zepbound through Hims & Hers when it’s 70% cheaper through LillyDirect.

Convenience is Hims & Hers’ core value proposition, but is that really worth a 70% markup?

BofA’s bearish stance comes amid growing concerns that the telehealth juggernaut may struggle to maintain its torrid growth pace. If so, the premium investors have been willing to pay for HIMS stock may no longer be justified.

Remarkable growth, but can it last?

Hims & Hers (HIMS) has been one of Wall Street’s top-performing health stocks over the past five years. Even after a 57% pullback from its February peak, the stock remains up more than 210% over that period.

At the height of its rally, HIMS traded at 85 times trailing earnings. Its trailing P/E has since dropped to 55, as investors continue to focus on the company’s growth trajectory.

Hims & Hers now counts 2.2 million subscribers and reported $1.48 billion in revenue last year. The company expects to generate between $2.3 billion and $2.4 billion in 2025, implying growth of nearly 60%.

However, some analysts question whether that growth is achievable.

Analyst Geoffrey Seiler noted that the Food and Drug Administration (FDA) recently announced that semaglutide — a key weight-loss ingredient — is no longer in short supply.

After a 90-day grace period, Hims & Hers would no longer be permitted to sell compounded drugs containing semaglutide, which have been among its top sellers.