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It's Time To Buy Weight Watchers, According To These Sell-Side Analysts

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It's Time To Buy Weight Watchers, According To These Sell-Side Analysts
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The Street became decidedly more bullish on Weight Watchers International, Inc. (NYSE: WTW) Tuesday.

JPMorgan analyst Christina Brathwaite initiated coverage with an Outperform rating and $105 price target, while D.A. Davidson analyst Linda Bolton Weiser initiated with a Buy rating and $143 price target.

What The Numbers Say

D.A. Davidson's Bolton Weiser is encouraged by accelerating growth in new subscribers, long-term plan subscriptions and constant currency revenue, as well as a lengthening average client stay. These metrics are expected to precede positive financial performance.

“If growth acceleration continues, 2018 guidance could prove conservative,” Bolton Weiser said in a Tuesday note.

The analyst forecast 46-percent operating profit growth in 2018 as Weight Watchers pursues its goal to become the “everything app” for health and wellness and expand its domain in a $3.7-trillion industry.

How The Strategy Plays Out

After years of earnings and revenue pressure, Weight Watchers’ trajectory has stabilized, and the company is positioned for outsized growth through an updated points program, mobile platform improvement and alignment with social media influencers like Oprah Winfrey, said JPMorgan's Brathwaite. 

“We believe WTW’s continued investments in these areas will fuel mid-teens-plus sales growth and 20-percent-plus earnings growth as mix shift benefits bolster profitability,” the analyst said. 

The shift toward online subscriptions will widen Weight Watcher's gross margins, according to D.A. Davidson. 

Brathwaite also expects earnings revisions and multiple expansion to drive upside, with model consistency allowing Weight Watchers to reinstate its dividend.

Weight Watchers shares were trading up 6.52 percent to $92.57 at the time of publication Tuesday. 

Related Links:

Weight Watchers CEO Discusses Relevance In The Era Of Apps And Wearables

Weight Watchers Trading Up 6.4% After Hours Following Q1 Earnings Beat

Latest Ratings for WTW

DateFirmActionFromTo
Aug 2018UBSMaintainsNeutralNeutral
Aug 2018B. Riley FBRMaintainsBuyBuy
Jul 2018KeyBancInitiates Coverage OnOverweight

View More Analyst Ratings for WTW
View the Latest Analyst Ratings

Posted-In: Christina BrathwaiteAnalyst Color Long Ideas Price Target Initiation Top Stories Analyst Ratings Trading Ideas Best of Benzinga

 

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