Hims & Hers stock fell 7.4% after downgrade

Hims & Hers Health Inc. saw its stock drop by 7.4% early Tuesday morning. This decline followed a note from Bank of America, which raised its price target for the stock to $22 per share. The new price target is just $1 higher than before but is still $10 below what the stock is currently worth. Bank of America also labeled the stock as a "sell," indicating it does not see a good investment at this price. According to the bank, sales of GLP-1 products, which are significant for Hims & Hers, surged 124% in February. However, this increase is largely due to a major advertising campaign during the Super Bowl. There are concerns that future sales may not remain as high because the FDA is ending the approval for compounding similar drugs. This means that the profits Hims & Hers earned in the past might decrease, affecting its growth potential. With the stock currently trading at 65 times its past earnings, Bank of America questions whether it is still a smart buy. If the stock price falls into the low $20s, the bank's opinion could change.