Navigating the stock market requires careful consideration, especially within the healthcare sector. Healthcare stocks often maintain stability during economic downturns due to the essential nature of medical spending. However, potential policy changes, such as significant tariffs, can introduce uncertainty. This analysis examines three prominent healthcare stocks: Hims & Hers (HIMS), Eli Lilly (LLY), and Tempus AI (TEM), assessing their investment potential based on Wall Street analyst ratings.
This article delves into each company’s recent performance, challenges, and future prospects. By comparing their strengths and weaknesses, we aim to provide a clear perspective on which stock currently holds the most promise for investors. Our evaluation includes factors such as market trends, analyst expectations, and company-specific developments.
Hims & Hers Health (NYSE:HIMS) Stock
Hims & Hers Health has experienced substantial growth, with its stock price rallying over 108% year-to-date. The telehealth platform has garnered investor attention through strong online revenue, increasing subscriber numbers, and expansion efforts in the global market. However, the company faced a setback when Novo Nordisk (NVO) terminated their partnership, alleging the sale of knockoff versions of Wegovy and deceptive marketing practices. HIMS attributed the fallout to the pharma giant and is now contending with legal challenges.
Looking ahead, HIMS is expanding beyond the U.S. market, with plans to launch in Canada next year. This expansion coincides with Novo Nordisk’s loss of patent protection on semaglutide drugs Ozempic and Wegovy in Canada, due to a missed maintenance fee in 2019. The company aims to capitalize on the availability of generic semaglutide in the Canadian market, offering a more accessible alternative to branded medications.
Is HIMS Stock a Good Buy?
Following the announcement of the Canada expansion, Citi analyst Grosslight reiterated a Sell rating on Hims & Hers stock, setting a price target of $30. Grosslight noted that HIMS is expanding internationally after the acquisition of Zava, a European telehealth platform. The analyst also pointed out that the launch of HIMS’s weight loss program in Canada is timed to coincide with the introduction of generic semaglutide.
Grosslight believes that the pricing dynamics in Canada differ significantly from those in the U.S. In Canada, branded semaglutide is relatively affordable, and generics are expected to be much cheaper, reducing the potential for pricing arbitrage. The analyst suggests that HIMS will rely on its marketing capabilities to attract Canadians seeking easy access to generic semaglutide. The success of the program will depend on the pricing strategy, which has not yet been disclosed by Hims & Hers Health.
Currently, Wall Street has a Hold consensus rating on Hims & Hers Health stock, based on seven Holds, two Sells, and one Buy recommendation. The average price target of $41.78 indicates a 17% downside risk.
Eli Lilly (NYSE:LLY) Stock
Eli Lilly stock has remained flat year-to-date, primarily due to concerns over potential tariffs. The Trump administration has considered implementing tariffs on pharmaceutical imports to boost domestic manufacturing. Given that a significant portion of the ingredients used in U.S. prescription drugs are imported, this policy could increase production costs and impact margins.
Despite these concerns, analysts remain largely bullish on Eli Lilly stock, driven by the strong performance of its weight loss and diabetes drugs. In the first quarter of 2025, Mounjaro, Eli Lilly’s blockbuster diabetes treatment, generated $3.84 billion in revenue, reflecting a 113% year-over-year growth. Additionally, the weight loss drug Zepbound saw a substantial increase in sales, jumping from $517.4 million in the prior-year quarter to $2.31 billion.
Is Eli Lilly Stock a Buy, Sell, or Hold?
Eli Lilly is scheduled to announce its second-quarter results on August 7. Analysts expect the company’s earnings per share to reach $5.56, with revenue projected to be $14.58 billion, reflecting a growth of approximately 29%. Ahead of the Q2 results, JPMorgan analyst Schott reiterated a Buy rating on Eli Lilly stock with a price target of $1,100.
Schott expects Eli Lilly to deliver solid Q2 results, with potential upside to Mounjaro and Zepbound estimates based on strong prescription growth trends. The analyst’s Q2 revenue estimate of $14.8 billion is higher than the consensus, but the EPS forecast of $5.49 is below the Street’s estimate. This is due to an anticipated increase in Eli Lilly’s operating expenses to support a growing late-stage pipeline and direct-to-consumer initiatives.
Wall Street has a Strong Buy consensus rating on Eli Lilly stock, based on 16 Buys, two Holds, and one Sell recommendation. The average price target of $1,002.88 indicates approximately 30% upside potential from current levels.
Tempus AI (NASDAQ:TEM) Stock
Tempus AI stock has rallied 81% year-to-date. The company utilizes artificial intelligence (AI) to advance precision medicine, leveraging over 40 million research records to drive scientific discovery. Tempus AI has demonstrated impressive growth, reporting a 75.4% year-over-year increase in revenue in Q1 2025. The company has raised its full-year revenue guidance to $1.25 billion, projecting an 80% growth. Tempus AI expects to achieve a positive adjusted EBITDA of $5 million for the full year 2025, reflecting an increase of $110 million over 2024.
Is Tempus AI a Good Stock to Buy?
In May, Spruce Point Capital Management accused Tempus AI of engaging in aggressive and suspicious accounting practices, stating that it is led by individuals with a dubious history. In response, TD Cowen analyst Walsh noted that the report highlighted mostly known issues, with some aspects appearing exaggerated and others worth further investigation. Despite these allegations, Cowen reiterated a Buy rating on Tempus AI stock with a price target of $62.
Overall, Wall Street has a Moderate Buy consensus rating on Tempus AI stock, based on five Buys and three Holds. The average price target of $68.86 indicates approximately 13% upside potential from current levels.
Conclusion
Wall Street shows high bullishness towards Eli Lilly stock, cautious optimism for Tempus AI, and a neutral stance on Hims & Hers stock. Currently, analysts foresee greater upside potential in LLY stock compared to the other two healthcare stocks. The optimism surrounding Eli Lilly is fueled by its growth prospects, supported by a robust portfolio of weight loss and diabetes drugs, along with a promising pipeline.
Investors should carefully consider these analyst ratings and conduct their own due diligence before making investment decisions. The healthcare sector offers diverse opportunities, but understanding the specific dynamics of each company is crucial for informed investing.
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