Market Overview

Weight Watchers Is Unlikely To Hit Its Revenue Goal, Goldman Sachs Says In Neutral Initiation

Weight Watchers Is Unlikely To Hit Its Revenue Goal, Goldman Sachs Says In Neutral Initiation
Related WTW
44 Biggest Movers From Friday
Not Enough New Year's Resolve: JPMorgan Downgrades Weight Watchers

Weight Watchers International, Inc. (NYSE: WTW) deserves credit for turning around its core business, but the stock shouldn't be bought by investors at this time, according to Goldman Sachs.

The Analyst

Analyst Jason English initiated coverage of Weight Watchers with a Neutral rating and $73 price target.

The Thesis

Weight Watchers is benefiting from a successful turnaround, but English said this begs the question: what stage is the turnaround in and how sustainable is the double-digit revenue growth rate seen in recent quarters? 

The consensus estimate assumes a bullish outlook moving forward, but the analyst's assumptions point in a different direction. (See English's track record here.)

Weight Watchers is modeled to end 2020 with 4.8 million subscribers, which does imply a robust 9-percent compounded annual growth rate from 2018 estimate, but falls modestly short of the company's own guidance of 5 million users, the analyst said.

Coupled with an assumption that revenue per subscriber continues to move lower, Weight Watchers' guidance of $2 billion in revenueby 2020 is likely unattainable, English said. 

Finally, Weight Watchers may be up against a shift in sentiment, as being overweight has "become more acceptable," the analyst said. The percentage of overweight and obese people who are actively dieting to lose weight has fallen from around 66 percent in 2012 to around 55 percent in 2016, he said. 

Price Action

Weight Watchers shares were moving down 1.26 percent to $73.96 at the time of publication Tuesday morning.

Related Links:

Analysts React To Weight Watcher's Q2 Earnings

Oppenheimer Bullish On Weight Watchers Margin Expansion Opportunities

Latest Ratings for WTW

Jan 2019JP MorganDowngradesOverweightNeutral
Nov 2018Bank of AmericaMaintainsBuyBuy
Nov 2018JP MorganMaintainsOverweightOverweight

View More Analyst Ratings for WTW
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Jason English Obese OverweightAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


Related Articles (WTW)

View Comments and Join the Discussion!

Latest Ratings

CNPRBC CapitalUpgrades34.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

TOP 3 Crypto Price Predictions: Critical Situation For Ethereum That Is Questioned Both Internally And Externally

Perfect September Storm: 5 Reasons To Be Gloomy About Markets, Bullish On The USD