Hims & Hers Health (HIMS) faces near-term margin pressure as it pivots to branded GLP-1 from compounded products, while channel checks on the Eucalyptus deal point to long-term upside, BofA Securities said in a note Wednesday.

The investment firm said it lowered its 2026 earnings before interest, taxes, depreciation, and amortization estimate to about $255 million from $260 million, about 20% below Street estimates, as GLP-1 EBITDA contributions could fall 50%.

The firm also cut its 2026 revenue estimate to $2.37 billion from $2.44 billion, with GLP-1 revenue forecast for the year down to $516 million from $577 million due to lower revenue per GLP-1 subscriber.

BofA is more constructive on international expansion following Eucalyptus channel checks, citing approximately 40% gross margins and around 20% contribution margins per subscriber. However, this may initially dilute margins, creating a 1 to 2 percentage point EBITDA headwind, according to the note.

BofA Securities maintained its neutral rating on the stock and lowered its price target to $21 from $23.

Shares of Hims & Hers Health were up 1.7% in Wednesday trading.

Price: 19.84, Change: +0.34, Percent Change: +1.72