WW International Tumbles on Slim Earnings Miss

WW International, Inc. (WW) slumped nearly 8% Wednesday after the company formally known as Weight Watchers reported quarterly results that fell short of Wall Street expectations.

The firm disclosed second-quarter (Q2) adjusted earnings of 67 cents a share, missing analysts’ forecast of 72 cents a share. On the sales front, revenues for the period of $333.64 million came in 1.67% below consensus and declined from the year-ago figure of $369.02 million. Studio closures resulting from the health crisis weighed down the company’s top line.

Through Wednesday’s close, WW International stock has a market capitalization of $1.65 billion and is down 36.12% so far in 2020. However, over the past three months, the shares have recovered about 7%.

Adding Subscribers

The weight-loss program operator grew its subscriber base during the quarter by 23% to 5 million members thanks to a record level of digital subscribers. Moreover, management believes the transition to online fitness sessions will continue to benefit the company amid the ongoing coronavirus pandemic.

“Creating exciting new coaching experiences, adding new digital features and producing creative content that is insightful, interactive and engaging will greatly increase our ability to attract new members to WW, retain them longer, help them achieve their weight loss and wellness goals, and deliver on our mission to democratize wellness for all,” the firm’s CEO Mindy Grossman said, per Barron’s.

Wall Street View

Riley Securities analyst Kara Anderson expects the company’s digital offerings to continue performing, given they meet consumers’ shift to online participation. The brokerage reiterated its ‘Buy’ rating after the Q2 result and bumped its price target to $36 from $30 – indicating a 47% gain from Wednesday’s $24.41 close. Elsewhere on Wall Street, the stock receives 6 ‘Buy’ recommendations, 1 ‘Overweight’ recommendation, and 6 ‘Hold’ recommendations. Currently, only one analyst has an “Underweight” rating on WW International shares.

Technical Outlook and Trading Tactics

Although the stock has trended steadily higher since plumbing its March low, it trades beneath the 200-day simple moving average (SMA), indicating price remains in a longer-term downtrend. Yesterday’s earnings-induced breakdown on above-average volume below a symmetrical triangle could drive further falls in the coming days. Those who want to buy the stock should look for entries between $17.50 and $20, where the shares find a zone of support from two key horizontal trendlines extending back over the past 12 months.