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Weight Watchers Sinks as JPMorgan Sees Few Dieters in 2019

Ryan Vlastelica
Weight Watchers Sinks as JPMorgan Sees Few Dieters in 2019

(Bloomberg) -- Weight Watchers International fell on Friday, dropping for a third straight session after JPMorgan downgraded the stock to neutral from overweight, citing indications of “a weak start to the New Year Resolution enrollment period, which is the key sign up period of the year.”

Analyst Christina Brathwaite also slashed her price target on the stock by nearly 50 percent, dropping it to a Street-low of $37 from $70. The average target is $74, according to Bloomberg data.

Shares slumped as much as 10 percent, extending a lengthy decline that has erased more than two-thirds of the company’s value since June. The stock is trading at its lowest level since June 2017.

“Current trends will make it difficult for the company to generate significant growth in members,” JPMorgan wrote to clients, citing channel checks for its view on membership activity. “If sales growth comes in below expectations, WTW’s profitability will likely also be challenged.”

The company “could make up for the shortfall in the coming months (particularly as some of the shortfall may be related to the government shutdown as furloughed workers are less likely to start a diet membership),” but JPMorgan sees this as unlikely.

Currently, nine firms have a buy rating on Weight Watchers, while five rate it a hold and zero rate it a sell, according to Bloomberg.

(Updates stock activity to market open in third paragraph.)

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm

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