Shares of Hims & Hers Health (NYSE: HIMS) rose approximately 4% to $25.28 on Thursday, extending gains from a 14% surge the previous session, as investors welcomed a regulatory pivot that could expand the company's addressable market in peptide-based therapies.
FDA Signals Policy Shift on Peptides
The rally followed comments from Robert F. Kennedy Jr. indicating that the U.S. Food and Drug Administration (FDA) would relax restrictions on certain peptide substances. The agency plans to remove several peptides from a category associated with significant safety risks and roll back a Biden-era initiative that classified them as Category 2 substances due to concerns over cancer and cardiovascular risks.
Kennedy described the move as a "long-overdue action to restore science, accountability, and the rule of law." The FDA has also scheduled a July meeting to evaluate whether seven specific peptides should be permitted for production by compounding pharmacies, a decision that could further shape the regulatory landscape.
Peptides have gained popularity for applications such as muscle building and injury recovery, despite limited clinical evidence and ongoing safety debates.
Strategic Expansion into Peptide Market
The regulatory developments are seen as a catalyst for Hims & Hers, which has been positioning itself to capitalize on the peptide market. The company acquired a peptide manufacturing facility in California last year, signaling its intent to expand beyond its core telehealth and weight-loss offerings.
Peptides are already integral to Hims' business. Semaglutide, the active ingredient in Novo Nordisk's weight-loss drug Wegovy, is a peptide, and Hims began offering compounded semaglutide in 2024. Earlier this year, the company also struck a deal with Novo Nordisk to sell branded Wegovy and Ozempic injectables, as well as oral Wegovy, marking a shift away from compounded versions.
The easing of restrictions could allow Hims to broaden its product portfolio and tap into new revenue streams tied to peptide-based therapies, potentially leveraging its existing GLP-1 capacity for other peptides.
Analyst Outlook and Cautionary Notes
Analysts have begun factoring in the potential upside. Bank of America raised its price target on Hims to $25 from $21, maintaining a neutral rating. The brokerage noted that the FDA's move could open additional revenue opportunities and allow the company to repurpose its GLP-1 infrastructure for other peptide therapies. To reflect these prospects, Bank of America increased its valuation multiple assumption to 25.5x from 21.5x.
However, the firm cautioned that the FDA's actions represent only an initial step and do not guarantee that any peptide substances will ultimately be approved for compounding use. Longer-term outcomes remain dependent on further policy decisions and clinical considerations.
For context, other companies in the biotech and pharmaceutical space have also seen significant moves recently. For instance, Eli Lilly stock surged 4% on promising retatrutide data, highlighting the competitive landscape in obesity and peptide-based therapies.
While the near-term sentiment is positive, investors should remain mindful of regulatory risks and the need for further clarity from the FDA. The July meeting will be a key event to watch for additional catalysts or setbacks.
This article is for informational purposes only and does not constitute financial advice.
