This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Weight Watchers (WTW) Is Being Decimated

Stocks in this article: WTW

NEW YORK (TheStreet) -- Weight Watchers (WTW) warned of a difficult year ahead as it capped off a weak 2013, causing shares to plummet on Friday.

By midmorning, shares had unloaded 26% to $22.62. Trading volume of 4.2 million was more than three times its three-month daily average.

The weight-loss services provider said it expects fiscal 2014 earnings between $1.30 and $1.60 a share, half analyst consensus. According to Thomson Reuters, expectations were for per-share earnings of $2.78.

"While we are confident that we are on the right track to execute a successful transformation, 2014 will be a very challenging year," said CEO Jim Chambers in a statement.

Credit Suisse reiterated the stock as "neutral" but downwardly revised its price target to $24 from $31.

"The lower-than-expected guidance ... highlights that the ongoing structural challenges persist, as the competitive dynamic continues to evolve unfavorably, which is pressuring WTW's business model," wrote analyst Glen Santangelo in a research report.

"Early 2014 marketing efforts designed to re-engage consumers seem to be struggling to gain traction in the face of an intensifying competitive environment characterized by the proliferation and improvement in free weight-loss online/mobile applications & fitness monitors."

Similarly, Wedbush Securities maintained a "neutral" rating but cut its price target to $19 from $26.

"Given Weight Watchers' strong brand name and attractive cash flow, offset by its high debt load and sluggish trends, we believe shares should trade at an EV/2014E EBITDA multiple of 11x, relatively in line to other mid-cap healthy lifestyle firms (GNC, HAIN, UNFI, VSI)," wrote analysts in the report.

"We are sharply lowering 2014 estimates to reflect current trends and introducing 2015 estimates for revenue of $1.3 billion and EPS of $1.50, reflecting lower membership base entering the year, offset by a lower cost structure."

Also See: Weight Watchers Reports Fourth Quarter

TheStreet Ratings team rates WEIGHT WATCHERS INTL INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate WEIGHT WATCHERS INTL INC (WTW) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share."

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,080.30 +50.09 0.28%
S&P 500 2,092.42 +10.54 0.51%
NASDAQ 4,814.3070 +40.8350 0.86%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs