WW Lifted to Buy With Higher Target at Goldman

Goldman Sachs analysts see a "powerful inflection in subscriber growth" at WW as the weight-management-services company conducts an aggressive marketing campaign.
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WW International (WW) - Get Report jumped after Goldman Sachs analysts raised their rating on the  weight-management-services company to buy and nearly doubled their target price.

The analysts, led by Jason English, lifted the rating on the parent of Weight Watchers to buy from neutral and the target to $48 from $26.

WW’s variety of products are proving attractive to consumers, the analysts wrote in a report.

They see the potential for a “powerful inflection in subscriber growth that in turn should drive a positive estimate-revision cycle and rerating for the stock,” the report said.

“WW’s fundamental (and stock-price) performance has historically run in cycles. Positive inflections in these cycles have typically been accompanied by multifaceted layers of new news to engage the consumer.”

The analysts are enthusiastic about the company's myWW customization program, launched in November; its “aggressive” marketing and advertising efforts on TV and social media, and the co-branded Oprah 2020 Vision tour with the TV personality Oprah Winfrey.

“The data suggests it is working,” the analysts wrote. “Based on our analysis of Google (GOOGL) - Get Report Trends and Sensor Tower App downloads, we … expect subscriber growth to accelerate to 14% in 2020.”

As a result, the analysts increased their fiscal 2020 forecast for earnings per share by 47%, putting the forecast 20% ahead of FactSet’s consensus, they said.

Other analysts are missing the boat, Goldman’s team said. “Investors now seem to be anticipating lackluster recruitment growth,” they said.

At last check, WW shares traded at $36.54, up 5.8%. They have traded on Tuesday up as much as 8.9%. 

In the 52 weeks through Monday, WW stock had risen 8.3% against the S&P 500's rise of more than 19%.