In January, WW International Inc. suffered its worst month on record, erasing the wellness company’s gains since it said in March it was entering the growing market for a new class of weight-loss drugs.
Shares of WW, better known as WeightWatchers, fell 6.1% on Wednesday, bringing the month’s decline to 57%, amid increasing competition and concerns about subscriber growth. The latest decline came as part of a broad market decline on Wednesday after Federal Reserve Chairman Jerome Powell signaled to officials. let’s take our time lower interest rates.
The results are a dramatic reversal from 2023. On March 7, stocks posted their biggest one-day gain since 2015 after World War II hit. deal with for obesity drug supplier Sequence. Enthusiasm about the acquisition and its potential to improve WW’s business has driven shares up 127% in the past year.
The main reason for January’s decline occurred earlier in the month when Eli Lilly and the company launched an initiative to sell weight-loss drugs directly to the public. threatening Key growth area for WW.
Some Wall Street analysts are concerned about potential signs of slowing demand for WW subscriptions.
Craig-Hallum Capital Group LLC analyst Alex Fuhrman warned this week that consumer interest in traditional weight-loss companies is “significantly down” from last year. WW app downloads on Android devices and the company’s web traffic declined in early 2024, Fuhrman said in a research note. He noted similarly weak trends at weight-loss startup Noom Inc.
Of course, Linda Bolton Weiser of DA Davidson & Co. said WW warned in December that third-party data could be noisy due to Sequence’s integration into its app.
“Investors are very scared about app download data,” she said. “The trend appears to have changed, but on the other hand, the data may be skewed.”
WW’s fourth-quarter subscriber earnings update in March will clarify whether app download data accurately reflects recent trends.
“Long term, WeightWatchers remains well positioned to capture a large market share in this space,” she said. “They have brand equity when no one else in the weight loss space has it.”
WW has four buy ratings, three hold ratings and one sell rating among analysts tracked by Bloomberg. The average analyst price target of $11 implies a potential return of approximately 191% over the next 12 months.