Wed, Feb-27-19, 15:52
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Plan: P:E/DDF
Stats: 225/150/169
BF:45%/28%/25%
Progress: 134%
Location: NC
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A lot less money as of today.....
https://www.marketwatch.com/amp/sto...99-434730CA90CC
Quote:
Weight Watchers stock debacle is a harsh reminder of another, pre-Oprah crash
CEO not giving in to keto craze, even though stock nears biggest-ever selloff on 4th anniversary of previous biggest-ever selloff
Shares of WW, formerly known as Weight Watchers International Inc., were on the verge Wednesday of suffering their worst day since going public more than 18 years ago, as a number of analysts soured on the company following a dismal earnings report and outlook.
The company WTW which moved “beyond weight to wellness” to become WW five months ago, reported late Tuesday fourth-quarter results that missed expectations, according to FactSet, and provided profit guidance that was less than half what analysts had projected.
Chief Executive Mindy Grossman said on the post-earnings conference call with investors that the weak outlook was a result of a “very disappointing” winter recruitment campaign, amid a “particularly competitive” diet-support environment.
Don’t miss: Market share, stock price for the former Weight Watchers take a beating from wellness startup Noom.
No less than six of the 15 analysts surveyed by FactSet have downgraded WW shares, and seven have slashed their price targets, with the average target now 61% below what it was at the end of January.
Regarding competition from the keto diet craze: “We’ve lived through this for 57 years and we’re not going to play a game and we never have. We’re going to be science informed and we’re sustainable for the long-term.”
J.P. Morgan analyst Christina Brathwaite, who was bullish on the stock as recently as November, reiterated her underweight rating while cutting her price target to $14 from $25. She also added the stock to J.P. Morgan’s U.S. Equity Analyst Focus List, as the top “short” idea.
Edward Yruma at KeyBanc Capital cut his rating to sector weight, giving up on the bullish view he’s had since July, writing in a note to clients that “there’s no coming back from a weak January.”
WW’s stock plummeted 34% in very active afternoon trade, enough to pace all decliners trading on major U.S. exchanges. Volume swelled to 33.8 million shares, compared with the full-day average of about 2.7 million shares.
The selloff might seem like déjà vu for some long-term investors, as it comes on the fourth-anniversary of what is currently the worst one-day performance since the stock went public about 18 years ago.
The stock had plummeted 35.5% on Feb. 27, 2015, after the company reported disappointing results and provided a full-year profit outlook that was less than half what was expected, amid a drop in active subscriber bases and lower recruitments.
On the bright side, while the stock fell much further over the next several months, to a record closing low of $3.78 on July 9, 2015, the company was eventually able to right the right the ship. The first big win was getting Oprah Winfrey to buy a large equity stake, take a leadership role and help promote its products and services.
See related: Weight Watchers stock plunge means Oprah’s stake has shrunk by $558 million in 8 months.
The stock got a further boost in April 2017 after it named Mindy Grossman as its new CEO, who had spent the previous nine years as CEO of HSN Inc.
But since peaking at a record close of $103.09 on June 20, 2018, the stock has lost more than 80% of its value, and about $5.6 billion in market capitalization. Analysts seem unsure how the company will right the ship this time.
“Beyond the 2019 challenges, we believe the pathway for [WW] to return to subscriber growth in 2020 is unclear, despite management planning to launch new diet program innovation in 2020, given the increasingly competitive environment, particularly as the company’s rebranding initiative to wellness from weight loss seems to have fallen flat,” wrote J.P. Morgan’s Brathwaite.
Since the company changed its name to WW on Sept. 24, 2018, the stock has tumbled 72%. In comparison, the S&P 500 index SPX has lost 4.9% over the same time. Meanwhile, WW shares are still nearly triple the price Oprah paid for them, and could pay to buy more if she chooses.
Analyst Michael Swartz at SunTrust Robinson Humphrey downgraded the stock to hold from buy and lopped 63% off his price target to $25. He said that while he preferred not to “pile on a stock” by downgrading it after such a large selloff over the past eight months, the post-earnings conference call provided little comfort that a change to the marketing message and near-term investments will bear fruit this year.
“With this likely to be an early 2020 event, at the earliest, we prefer to move to the sidelines,” Swartz wrote.
Linda Bolton Weiser at D.A. Davidson cut her rating to neutral from buy, and slashed her price target to $23 from $137. Among her concerns is “uncertainty over the duration of the keto diet craze,” which WW said is affecting its business and how rewards in the new loyalty program will hurt gross margin.
Regarding keto, CEO Grossman stood firm, saying crazes like that happen very often, so the company was not going to change its DNA. The keto, or ketogenic, diet is a high quality fat, adequate protein and low carbohydrate diet meant to force the body to burn fat rather than carbohydrates.
“We’ve lived through this [competition from trend diets] for 57 years and we’re not going to play a game and we never have,” Grossman said on the post-earnings call, according to a transcript provided by FacSet.
“We’re going to be science informed and we’re sustainable for the long term,” she said.
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More stories in Media: https://forum.lowcarber.org/showthread.php?p=9318049
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