Canaccord raises Hims and Hers stock price target on weight loss drugs

Canaccord raised its Hims & Hers price target to $40 from $32 (Buy) as the stock gained ~67% in Q2; shares last traded at $34.67 and the LTM revenue was $2.37B (+33%) with 73% gross margin. Positive catalysts include branded weight-loss drug transitions and generic semaglutide distribution in Canada, plus Novo Nordisk telehealth partnership commentary. Offsetting uncertainty comes from FDA recommendations against legal manufacturing of compounding peptides, with the PCAC scheduled for July 23-24—potentially affecting peptide-driven growth—while analysts still flag the shares as overvalued vs fair value.

Analysis

HIMS is migrating from a regulatory-arbitrage story to a branded-distribution story. That usually compresses the long-duration multiple because the easiest growth comes from a channel that is not structurally defensible once regulators close the loophole; the market is likely overpaying for current growth while underpricing future CAC creep and mix-related margin pressure. NVO is the cleaner beneficiary: the partner relationship broadens distribution and improves demand data, while the intermediary risk shifts onto the telehealth layer over 6-18 months.

The July committee meeting is the near-term binary. If the FDA tightens the compounding path, the market should re-rate HIMS on lower terminal growth and lower operating leverage, not just headline sales, which is the more important P&L impact. If the review is lenient, HIMS can squeeze for days, but that would likely be a tactical move unless the company can prove customer-acquisition payback holds after the cheap-supply tailwind fades.

The consensus appears too confident in momentum persistence and not confident enough in normalization risk. At roughly this valuation, HIMS is being treated like a recurring consumer platform, yet the next 1-3 months are event-driven and the 6-18 month setup is more about margin normalization than acceleration. The falsifier is simple: permissive FDA language plus stable gross margin/CAC through the next print; otherwise the recent rally looks more like a sentiment overshoot than a durable rerating.

Key Decisions for Investors

• Pair trade: long NVO / short HIMS into the July 23-24 PCAC window. Use HIMS as the higher-beta regulatory short and NVO as the lower-beta beneficiary of broader GLP-1 distribution; target relative outperformance over 1-3 months, and cover the short if the FDA explicitly blesses compounding or HIMS shows stable CAC with no margin deterioration.
• Tactical hedge: buy HIMS September 2025 35/27.5 put spreads only if implied vol does not already fully price the event. This is a defined-risk way to express a 15-25% de-rating on restrictive FDA language or any sign that branded migration is slowing.