WW International Inc (WW), the company behind the WW (formerly Weight Watchers) weight loss program, has faced challenging headwinds in recent years. A shift towards digital and social trends has disrupted the broader weight loss industry. Additionally, the economic impacts of the pandemic and rising inflation have squeezed consumer discretionary spending.
However, Wall Street analysts remain broadly optimistic on the iconic brand’s turnaround potential. As of December 14th, 2023, WW stock closed at $7.76 per share. This represents a 5.22% single-session gain, though shares remain down nearly 50% over the past year.
InvestorsObserver, an investment research firm providing analyst data to retail investors, currently ranks WW stock in the 47th percentile out of their universe coverage. This indicates higher expectations compared to over half of stocks under coverage. Specifically, the average analyst price target sits at $12.125 per share. Hitting this level would require nearly 50% upside from current prices.
Why Wall Street Sees Value in Struggling WW Stock
The bullish analyst stance likely stems from WW International’s moves to adapt to industry shifts and macroeconomic challenges.
Earlier this year, the company brought on new CEO Sima Sistani to lead a corporate turnaround. With experience at high growth tech companies, Sistani seems intent on accelerating WW’s digital transition. New partnerships with companies like Amazon also showcase a willingness to leverage third party platforms to boost engagement.
The market potential also remains substantial. Over 70% of American adults are considered overweight or obese. And while inflation impacts discretionary budgets, health-consciousness continues rising over the long run. WW has decades of brand equity with target demographics around sustainable weight loss solutions.
There are also signs the revised business strategy may be gaining traction. While total end of period subscribers declined 8% this past quarter, digital subscribers increased 6%. Management expects this mix shift driving improved profitability in coming periods.
Key Data Driving Latest Analyst Sentiment
In their most recent earnings release, WW International posted $269 million in Q3 2022 revenue. This translated to a GAAP EPS net loss of $1.36 per share. However, adjusted net income showed a profit of $0.45 per share.
While these results still showcase challenges, analysts likely noted sequential improvements across metrics like subscriber counts, margins, and cash flow. Comparing to pre-pandemic figures also shows the brand’s consumer base stabilizing.
Additionally, WW stock trades at a relatively attractive valuation multiple considering its household brand name. Shares currently hold a forward price-to-earnings ratio around 7.5x. Typically, stocks in the online services industry demand ratios above 20x earnings.
So while WW International still faces risks around executing its strategic vision, analysts broadly see upside potential at current prices. InvestorsObserver’s targeting modeling suggests shares reaching $12 per share over coming quarters if trends persist. With Wall Street bullish on one of America’s most iconic weight loss brands, investors may want to take a closer look at WW stock.
