Will This Target Price Decrease Hurt Weight Watchers (WTW) Stock Today? (Update)

Update (9:47 a.m.): Updated with Tuesday market open information.

NEW YORK (TheStreet) -- Credit Suisse reduced its target price on Weight Watchers  (WTW) to $20, reduced its estimates and set a "neutral" rating. The firm noted lower enrollment trends.

The stock was up 0.98% to $20.71 at 9:46 a.m. on Tuesday.

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Separately, TheStreet Ratings team rates WEIGHT WATCHERS INTL INC as a "hold" with a ratings score of C. TheStreet Ratings 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. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for WEIGHT WATCHERS INTL INC is rather high; currently it is at 59.38%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.14% trails the industry average.
  • WTW, with its decline in revenue, slightly underperformed the industry average of 0.2%. Since the same quarter one year prior, revenues slightly dropped by 7.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to $22.08 million or 54.21% when compared to the same quarter last year. Despite a decrease in cash flow of 54.21%, WEIGHT WATCHERS INTL INC is still significantly exceeding the industry average of -135.67%.
  • WEIGHT WATCHERS INTL INC's earnings per share declined by 47.6% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, WEIGHT WATCHERS INTL INC reported lower earnings of $3.63 versus $4.33 in the prior year. For the next year, the market is expecting a contraction of 61.6% in earnings ($1.39 versus $3.63).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Consumer Services industry. The net income has significantly decreased by 46.9% when compared to the same quarter one year ago, falling from $58.00 million to $30.80 million.
  • You can view the full analysis from the report here: WTW Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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