J.P Morgan Comments On Weight Watchers Stellar Earnings & Guidance

Weight Watchers WTW reported 4Q10 EPS and announced 2011 guidance yesterday. Not only did 4Q beat by some $0.11, but also the mid-point of guidance came in about $1.00 ahead of the Bloomberg consensus estimate. Not surprisingly, the stock had one of the most memorably positive days in recent consumer history, rising 45.6% and gaining about $1.4 billion in market cap J.P Morgan is staying Neutral as it thinks the stock is trading near fair value; however, there is a possibility that JPM's EPS estimates are too conservative and thus, even after yesterday's move, it sees more upside than downside risk in the shares over the near term or longer term. Thanks to management's successful and highly public revival of the points system, along with a well-received marketing campaign behind Oscar-winning Jennifer Hudson, WeightWatchers is on target to grow sales by 15-20% and EPS by up to 50% this year, according to management. J.P Morgan had expected a good year but never imagined that the consumer response to the new program would be so positive, so quickly. J.P Morgan is raising its PT from $42 to $65 and has a Neutral rating on WTW WTW is trading lower at $63.88