NEW YORK (AP) -- Shares of Weight Watchers climbed Friday after the weight-management company's fiscal first-quarter performance beat analysts' expectations.
THE SPARK: Late Thursday Weight Watchers reported earnings of 87 cents per share for the three months ended March 30. That was up from 74 cents in the prior-year period as there were fewer shares outstanding in the current quarter. Analysts surveyed by FactSet predicted earnings of 62 cents per share.
Revenue declined 3 percent to $486.9 million from $503.5 million, but still topped Wall Street's estimate of $483.9 million.
Weight Watchers also narrowed its full-year earnings forecast. It now foresees fiscal 2013 earnings between $3.60 and $3.90 per share. The company's prior guidance called for earnings in a range of $3.50 to $4 per share.
THE ANALYSIS: Jerry Herman of Stifel Nicolaus said in a client note that the quarter was much better than expected, with results helped in part by its cost-cutting efforts. The analyst maintained a "Hold" rating.
Wedbush's Kurt Frederick reiterated a "Neutral" rating and $42 price target. While cost savings helped the quarterly performance, the analyst said he's concerned about a slowdown in its online business as the company contends with increased competition from free social apps. Frederick also questioned whether a 17 percent drop in attendance during the quarter is a sign that Weight Watchers' current member base is later in its life cycle, and membership declines may continue.
"We believe new marketing and product innovation, both currently in the works, could turn the tide, but likely not for at least a few more quarters," Frederick said.
A representative for Weight Watchers did not immediately respond to an email seeking comment.
SHARE ACTION: Weight Watchers International Inc.'s stock rose $2.96, or 7 percent, to $45.27 in morning trading. The shares have traded in a 52-week range of $40 to $66. For the year to date, the stock is down 19 percent.
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