One of the worst things about a burgeoning weight-loss drug market is that other weight-loss methods—that take a lot of time and effort and unpleasantness and tend to not work so well by comparison—suffer. WW International (WW), otherwise known as Weight Watchers, is on the bad end of that particular dichotomy right now, and an all-time low is approaching. Shares were down 12.5% in the closing minutes of Friday’s session. The latest problem for WW came when Morgan Stanley put out a downgrade on the company’s stock.
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Analysts Nathan Feather and Brian Nowak got together and put out a note, lowering shares from Overweight to Equal Weight and cutting the target price not so far from the all-time low to just $1.25 per share.
The reason? Weight-loss drugs are a disaster for companies like WW, and that’s going to all but eliminate their ability to be cash-flow positive. Fiscal Year 2024 guidance will also have to be lowered, and with the debt load that WW is carrying around, it’s likely only a matter of time before they have a hard servicing their debts.
It’s worth noting that, so far, Feather has enjoyed a 67% success rate on his ratings, with an average return of 15.7% per rating.
Abandon Ship
And then, just to drive the point home like a rail spike dropped from low Earth orbit, Amy Meister left WW International after she’d been there not even a year. Meister was WW’s chief medical officer and likely be well-positioned to know if the company was circling the drain.
Meister was brought in to help WW reposition itself, moving from diet-only weight loss to diet with weight-loss drugs. Her appointment was supposed to “further Weight Watchers’ commitment to providing the most clinically proven tools and interventions surrounding weight health.” But now, Meister’s out, and there’s not much word about why she left.
Is WW International a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on one Buy, two Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After an 89% loss in its share price over the past year, the average WW price target of $3.83 per share implies 231.6% upside potential.
