Analyst Downgrades Signal Turbulent Year Ahead for Hims & Hers

Hims & Hers US4330001060

Shares of the telehealth company Hims & Hers came under significant selling pressure following a wave of cautious analysis from major Wall Street institutions. The stock declined 4.48% to $33.87 as investors digested warnings about rising costs, competitive threats, and compressed profitability expected in 2026.

Two prominent investment banks, Bank of America and Citigroup, have recently adopted a more pessimistic stance on the company's near-term outlook.

Bank of America analyst Allen Lutz reinforced an "Underperform" rating and reduced the price target from $32 to $29. The central thesis is that the coming year will require substantial capital expenditure. Hims & Hers is poised to make significant investments in hiring new talent, upgrading its technological infrastructure, and strengthening its supply chain. Lutz contends that Wall Street's current consensus, which anticipates a revenue increase of approximately $440 million for 2026, is overly optimistic. This skepticism is partly based on a noticeable deceleration in growth momentum observed during the fourth quarter.

Echoing this caution, Citigroup maintained its "Sell" recommendation with a $30 price target. The bank identified a specific competitive risk: the impending launch of an oral version of Novo Nordisk's Wegovy, priced at just $149 per month. A critical point of concern is that Hims & Hers does not appear on Novo Nordisk's official partner list. This exclusion could potentially lock the platform out of distributing this high-demand weight-loss medication, a segment where it has historically competed on accessibility and cost.

Leadership Counters with Strategy Focus

In a strategic address on January 9, CEO Andrew Dudum presented the company's counter-narrative. He emphasized a strategic pivot toward preventive medicine and artificial intelligence. Dudum pointed to the proprietary "MedMatch" technology as a key tool for deepening personalization for its 2.5 million subscribers (as of Q3 2025). He framed the investments criticized by analysts as essential for securing the business model's long-term viability. However, the competitive landscape in AI-assisted healthcare is intensifying, notably with OpenAI's recent introduction of "ChatGPT Health."

Valuation and Performance Metrics Under Scrutiny

The recent analyst moves come against a backdrop of weak technical performance. Over the past three months, the stock has plummeted 39.2%, starkly underperforming the S&P 500's 4.1% gain. Despite this correction, valuation remains elevated. The shares trade at a price-to-earnings ratio of about 63, based on trailing twelve-month earnings.

Market experts have been revising their forecasts downward. Over the last 60 days, the consensus earnings per share estimate for 2026 has been cut by 6.4% to $0.59. While the price-to-sales ratio of 2.9 appears attractive compared to the industry average of 4.9, anticipated margin compression—driven by higher marketing and infrastructure spending—is seen as limiting upside potential.

The next quarterly report, scheduled for February 23, 2026, will provide a crucial data point. It will offer insight into whether the projected $2.76 billion in revenue for the year is achievable and at what cost to profitability.