B. Riley FBR Raises Weight Watchers Price Target After 'Healthy' Q4 Print

Weight Watchers International, Inc. WTW reported better-than-expected fourth quarter results after the close Tuesday, with a 23-percent year-over-year jump in suscribers.  

The Analyst

B. Riley FBR analyst Kara Anderson reiterated a Buy rating on Weight Watchers and increased the price target from $86 to $98, suggesting roughly 40-percent upside from current levels.

The Thesis

Weight Watchers showed robust growth in Q4 across both its in-person and online platforms and all geographies, Anderson said in a Wednesday note. Recruitment improved due to the launch of the WW Freestyle plan in late December, the analyst said. 

Signaling a continuation of the healthy momentum, Weight Watchers said on the earnings call that recruitment growth is at its highest since turning positive in the fourth quarter of 2015, Anderson said. Member count could exceed 4 million by the end of the first quarter, she said. 

Weight Watchers guided 2018 revenues to $1.55 billion, up 19 percent year-over-year; adjusted EBITDA to $450 million; and earnings per share to $2.40-$2.70, ahead of the $1.90 consensus estimate, according to B. Riley FBR. 

The guidance keeps the company on track to achieve its $2-billion-plus 2020 revenue goal, Anderson said. B. Riley FBR looks for strong EBITDAS generation, helped by continued recruitment and retention amid a new articulation of the Weight Watchers brand later in 2018 and summer campaign. 

The Price Action

Weight Watchers' shares were up about 434 percent over the past year until Tuesday.

The stock was up 4.34 percent at $72.86 at the time of publication Wednesday morning. 

Related Links:

The Oprah Effect: Weight Watchers Pops On 2020 Speculation

Weight Watchers Drops After Oprah Says She Isn't Interested In Running For President