Why Weight Watchers Stock Has Gained 128% in 2018

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What happened

It has been a good year so far for Weight Watchers (NYSE: WTW) shareholders. The stock more than doubled during the first half of 2018 compared to a 2% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

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The rally has pushed the stock back into positive territory after it shed over 80% of its value between 2012 and 2015.

So what

Investors are excited about the many positive benefits of Weight Watchers' partnership with Oprah Winfrey, whose personal brand has clearly lifted Weight Watchers' franchise. Her spokesperson appearances helped the weight loss specialist make major membership gains last year as it transitioned to an online-focused subscription model. And that growth has accelerated in 2018, with subscriber numbers up 29% in the most recent quarter. The boost helped net income nearly quadruple to $39 million.

Now what

Increasing profitability led management to dramatically boost its outlook in early May. CEO Mindy Grossman and her team now see earnings rising to between $3 to $3.20 per share, up from their prior target of between $2.40 to $2.70 per share.

Those aggressive goals are premised on continued participation by Winfrey in its advertising, and that is completely at her discretion. But, given that the media mogul owns a significant stake in Weight Watchers, it's in her interest to keep supporting its growth.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.