Wed, Feb-27-19, 15:42
|
 |
|
|
Plan: P:E/DDF
Stats: 225/150/169
BF:45%/28%/25%
Progress: 134%
Location: NC
|
|
Weight Watchers is getting crushed by keto
Weight Watchers is getting crushed by keto
https://www.cnn.com/2019/02/27/inve...keto/index.html
Quote:
(CNN) — Oprah Winfrey famously proclaimed “I love bread!” in a Weight Watchers commercial three years ago. But carbs aren’t cutting it for the company anymore.
Shares of WW — Weight Watchers’ new name — fell more than 33% on Wednesday after the company shocked Wall Street with poor earnings and sales.
CEO Mindy Grossman attributed the problem to the keto diet, a popular eating regimen that makes bread and other carbs taboo. She said during a call with analysts Tuesday that keto is “becoming a cultural mean,” and she even called it a “keto surge.”
Wall Street is clearly nervous, too.
JPMorgan analyst Christina Brathwaite downgraded the stock to “underperform” last week and slashed her price target. One of the reasons? She was worried about competition from rival weight-loss service Diet Doctor, which is a proponent of keto.
The stock slide is also hurting Winfrey, the second-largest shareholder in the company. She bought 6.4 million shares of WW in October 2015 — a stake that at the time was valued at $43 million. At the peak of the stock’s value last July, her investment would have been worth about half a billion dollars, an amount that accounts for a sale she made of some stock last March.
Since that July high, WW stock has lost more than 80% of its value.
Grossman stressed that WW is not going to change its strategy just because there is a new diet plan that’s popular.
“Everybody on the diet side looks for the quick fix. We’ve been through this before and we know that we are the program that works,” Grossman said.
The-CNN-Wire
|
Weight Watchers Stock Is Getting Walloped Because the Keto Diet Is a Thing
Keto, the increasingly popular high-fat, low-carb diet, is cutting into the company’s business.
https://www.barrons.com/amp/article...iet-51551283915
Quote:
Weight Watchers stock was getting walloped on Wednesday, falling about 35% in morning trading after the Oprah-endorsed company—which is trying to shift its brand from weight loss to wellness—announced poor fourth quarter results and slashed its 2019 guidance on Tuesday.
Keto, the increasingly popular high-fat, low-carb diet, is cutting into the company’s business, chief executive Mindy Grossman said on the company’s conference call with analysts.
“We have a keto surge,” she said. “It’s a meme, it’s not like a company, it’s people have keto donuts, and everybody on the diet side look for the quick fix. We’ve been through this before, and we know that we are the program that works.”
Weight Watchers stock (WTW) was down more than 33% in late-morning trading, to $19.83 per share.
What’s new. The company said Tuesday after the market closed that it had earned $0.46 per share and brought in $1.4 billion in revenue in the fourth quarter. That was far below analysts estimates of $0.60 in earnings per share and $1.66 billion in revenue, according to Refinitiv.
And perhaps the worst news was the company’s guidance. Weight Watchers said it expects to earn between $1.25 and $1.50 per share this year, far below analyst estimates of $3.50. That bleak outlook sent the stock tumbling almost 30% in a little over a half-an-hour of after hours trading.
The company’s fourth quarter ended in December, and Weight Watchers’ traditionally strong start to the calendar year during New Year’s resolution season makes the low guidance particularly harsh.
Several analysts followed the negative news by downgrading Weight Watchers stock. Oppenheimer’s Brian Nagel downgraded the stock from outperform to perform, citing the weak fourth quarter results and the company’s “decidedly downbeat initial 2019 outlook, predicated on weak recruitment growth to start the year.”
Key Bank’s Edward Yruma said that for Weight Watchers, “there’s no coming back from a weak January,” and that he was downgrading the stock to sector weight. D.A. Davidson’s Linda Bolton-Weiser said the results were “even worse than feared,” and that she was cutting her rating to neutral from buy.
JPMorgan’s Christina Brathwaite reiterated her underweight rating and said Weight Watchers stock was now her top short idea. Brathwaite’s price target of $14 per share is about 28% below the stock’s current level.
The back story. Weight Watchers has been an extremely volatile stock in the last couple of years. It ran up more than 500% between the March 2017 and July 2018, then dropped more than 60% to its current levels.
In October 2015, when Oprah Winfrey announced that she had taken a 10% stake in the company, the stock more than doubled over the course of a few days.
Moving forward. Expect more Oprah in 2019, Davidson’s Bolton-Weiser predicts. The star’s endorsement is a huge asset to the company and Bolton-Weiser wrote that Oprah will be more prominent in the company’s ads over the coming month.
There’s also execution. Management has lowered the bar significantly for first quarter results, and the question is now whether they’ll clear it or if things will soften even more.
Write to Ben Walsh at ben.walsh~barrons.com
|
Last edited by JEY100 : Wed, Feb-27-19 at 16:48.
|
)
Linear Mode
