WW Worldwide Inc. suffered its worst month on document in January, erasing the wellness firm’s advance because it mentioned in March that it was getting into the rising marketplace for a brand new class of weight-loss medicine.
WW, higher referred to as WeightWatchers, slumped 6.1% on Wednesday, bringing its decline for the month to 57% amid rising competitors and concern round subscriber progress. The most recent drop got here as a part of a broad market slide Wednesday after Federal Reserve Chair Jerome Powell signaled officers aren’t rushing to chop rates of interest.
The efficiency is a stark reversal from 2023. The inventory notched its largest one-day acquire since 2015 on March 7 after WW struck a deal for telehealth obesity-drug supplier Sequence. Enthusiasm across the acquisition and its potential to show round WW’s enterprise drove the shares up 127% final 12 months.
A key driver of the January weak point got here early within the month when Eli Lilly and Co. launched an initiative to promote weight-loss medicine on to the general public, threatening a key progress space for WW.
Some Wall Avenue analysts are apprehensive about potential indicators of waning demand for WW subscriptions.
At Craig-Hallum Capital Group LLC, analyst Alex Fuhrman warned this week that client curiosity in conventional weight-loss firms is “down significantly” from final 12 months. Downloads of the WW app on Android units and internet site visitors for the corporate have declined in early 2024, Fuhrman mentioned in a analysis be aware. He flagged equally weak traits for weight-loss startup Noom Inc.
To make sure, D.A. Davidson & Co.’s Linda Bolton Weiser mentioned WW cautioned in December that third-party knowledge may very well be noisy because of the integration of Sequence into its app.
“Investors are very spooked about the app download data,” she mentioned. “The trend appears to have changed, but on the other hand, the data may be skewed.”
She mentioned WW’s subscriber replace with fourth-quarter earnings in March will make clear whether or not the app obtain knowledge precisely represents current traits.
“In the long-term, WeightWatchers is still well-positioned to be somebody that will gain major market share in the space,” she mentioned. “They have brand equity, whereas nobody else really does in the weight-loss space.”
WW has 4 purchase scores, three holds and one promote amongst analysts tracked by Bloomberg. The common analyst worth goal of $11 implies roughly 191% return potential over the following 12 months.
