WW International Share Price Forecast August 2021 – Time to Buy WW?
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Shares of WW International(NASDAQ: WW), formerly known as Weight Watchers International, plunged on August 11th after the company released second-quarter financial results. WW shares closed on August 11th at $24.36 with a downtrend of -24.56%.
WW International – Technical Analysis
WW International’s financial statement reveals a market cap of $1.694 billion with total assets worth $1.436 billion. Revenue for 2020 was at $1.38 billion with a profit margin of 5.45% which is a slight decrease from 2019’s $1.41 billion revenue. The company ended the quarter with 4.9 million subscribers which is a decline of 1.9% from the previous year. According to CEO Mindy Grossman, this was due to consumers asking for a pause in weight loss and wellness schemes to enjoy social reconnection as the world comes out of the pandemic.
Oscillators for WW International such as Stochastic RSI Fast (3, 3, 14, 14)( 59.42), Williams Percent Range (14)(−84.57), Bull Bear Power(−12.89) and Ultimate Oscillator (7, 14, 28)(36.22) are pointing towards a neutral action. Moving averages like Exponential Moving Average (100)(32.59), Simple Moving Average (100)(33.31), Exponential Moving Average (200)(31.15) and Simple Moving Average (200)(30.52) are pointing towards selling.
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Recent Developments
Weight Watchers started the year with a partnership with The Vitamin Shoppe aimed at producing protein boosters, select member favourite WW snacks and co-branded nutritional supplements. Vitamin Shoppe’s customer base consists of 53% males and 47% females as of 2020 while WW members are predominantly female (90%). The company had previously collaborated with Zoom to create an application focused on scalable behaviour change. WW also plays a part in the curation of custom and relevant wellness content for the WW Zapp application.
Weight Watchers experienced a revenue fall of 10.2% year-over-year to reach $311.4 million. The company ended the quarter with 4.9 million subscribers which was a decline of 1.9%. Workshop fees were reduced due to Coronavirus-related studio closures. E-commerce sales also declined in the second quarter compared to the first. The company’s adjusted operating income decreased by 36% to reach $64.9 million, while its adjusted earnings per share decreased by 27% to reach $0.48, which was well below WallStreet estimates for EPS at $0.66.
Weight Watchers has had interest from several hedge funds and institutional investors. For instance, Oregon Public Employees Retirement Fund increases its holdings by 4.9%, now owning 16193 shares of the company’s stock, with a total valuation of $585,000. Kendall Capital Management also owns 19085 WW shares after increasing its holdings by 6.0% during the 1st quarter. Other investors include American International Group and AdvisorNet Financial Inc, which own 113,196 and 22,215 shares respectively.
Should You Buy WW Shares?
If we look at the outlook for WW International in the medium term, we should expect revenue to pick up. As consumers have been spending more time home due to Covid related lockdowns. The demand for weight loss services drastically increased as people experienced limited movements and less restricted diets. Investors can also look at WW International’s pivot to digital services. Compared to a 72% subscriber base for its digital platform, it is almost 84% as of Q1 2021. Although overall revenue has gone down due to the company’s digital shift, its adjusted gross margin grew from 52.7% in the prior year to 59.9% in Q1 2021. Its valuation multiple also seems reasonable for an organisation experiencing a rapid digital shift. Thus investors may look to pick up WW shares and add them to their portfolios.
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