The shares of Weight Watchers (WTW) closed down almost 30% on Friday after the company reported lower than expected profits. After rallying strongly in the fall following the company’s announcement of its partnership with Oprah Winfrey, the shares have fallen back to Earth. The stock is now trading at $11, versus the 52 week high of $28 that it reached during the euphoria over the company’s transaction with the popular television personality. Under the deal reached with Oprah in October 2015, the entertainment icon agreed to take a 10% stake in the company and received options to purchase an additional 5% stake. She also joined the company’s board.

WHAT’S NEW: Weight Watchers reported a fourth quarter per share loss of 18c, versus the consensus outlook for a 2c per share profit. However, the company’s revenue came in slightly above expectations. Weight Watchers provided fiscal 2016 EPS guidance of 70c-$1, versus the consensus estimate of 81c. Weight Watchers said its profits were lowered by its $13.6M deal with Oprah, which reduced its earnings per share by 13c, and a $1.3M restructuring charge. Excluding those items, the per share loss would have been 3c, Weight Watchers stated. On a more positive note, Weight Watchers said that its membership base rose year-over-year last quarter for the first time since 2011. The deal with Oprah is having a positive impact on recruiting metrics, the company added.

ANALYST REACTION: Oprah appears to have “brought about a strong positive reversal in (Weight Watchers’) business trends,” Craig-Hallum analyst Alex Fuhrman wrote. Investors may be underestimating the company’s potential ability to benefit from its customer growth in 2017, Fuhrman believes. The analyst estimates that Weight Watchers’ EPS could reach 19c in 2017, and he reiterated a $35 price target and Buy rating on the shares.

PRICE ACTION: In morning trading, Weight Watchers fell about 26% to $11.55, but eventually closed down 29.20% to $11.01.

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