Shares of WW (NASDAQ: WTW), the company formerly known as Weight Watchers, were losing the wrong kind of weight today as the wellness specialist's stock tumbled on an analyst warning. As of 12:24 p.m. EDT, shares were down 11.6%.
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JPMorgan Chase analyst Christina Brathwaite maintained her underweight rating on the company, but cut her price target to $12 from $14, calling for the stock to fall by another third from where it is now. Brathwaite cited data from SimilarWeb, an analytics firm that measures website and app visits, that showed that daily active users had fallen by 40% in the first quarter.
Brathwaite is now forecasting an 18% decline from a year ago in North American subscribers at WW, to 2.5 million in the first quarter, adding more concerns to a stock that's collapsed over the last year over questions about its rebrand and a subscriber exodus.
WW shares are now down more than 80% from their peak last summer as the stock's earlier blockbuster gains, which started with media mogul Oprah Winfrey taking a stake in the company, have rapidly unraveled. The company has missed the mark in its last three earnings reports as its subscriber base and profits have begun to erode. Guidance in its fourth-quarter report called for 2019 earnings per share to fall by more than half from 2018 to a range of $1.25 to $1.50.
Its first-quarter struggles, if true, are especially concerning: The quarter is a key time of year for weight-loss and wellness companies as they count on new subscribers coming in after making new year's resolutions. In the fourth-quarter report, management expressed optimism about a new ad campaign around Winfrey, but it appears that its marketing has yet to deliver the desired results.
We'll learn more when WW reports first-quarter earnings, expected at the beginning of May. Analysts see revenue falling 10.4% to $365.7 million, and a loss per share of $0.26, down from a profit of $0.31 per share a year ago.
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