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How the Oprah Effect Is Tipping the Scales in Favor of Weight Watchers

Weight Watchers International Inc. (NYSE: WTW) came barreling out of the gate on Monday morning when it announced a monumental partnership with one of the biggest names in endorsements. The company said that it has joined forces with Oprah Winfrey, after she disclosed a 10% stake in the weight loss program. Not only has Winfrey taken a substantial stake in Weight Watchers, but also she has been appointed to the board of directors as well.

As a secondary part of this deal, Winfrey will be enrolling in the Weight Watchers program and will candidly share her experiences, perspective and progress along the way.

Looking at the chart, this boost is just what Weight Watchers needed. Over the course of the past 52 weeks, the stock was down over 75% to Friday’s close, but with Monday’s news shares are almost at half of these previous highs.

As one of the biggest names out there, Oprah has a huge following. In the past her book club has allowed for many authors, some previously unknown or unheard of, to rise to prominence. From the looks of it, we can expect the Oprah effect to tip the scales in favor of Weight Watchers.

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Winfrey said:

Weight Watchers has given me the tools to begin to make the lasting shift that I and so many of us who are struggling with weight have longed for. I believe in the program so much I decided to invest in the company and partner in its evolution.

Jim Chambers, president and CEO of Weight Watchers, added:

We are expanding our purpose from focusing on weight loss alone to more broadly helping people lead a healthier, happier life. Through our conversations, it became clear that there is tremendous alignment between Oprah’s intention and our mission. We believe that her remarkable ability to connect and inspire people to realize their full potential is uniquely complementary to our powerful community, extraordinary coaches and proven approach.

Considering this endorsement by one of the most powerful names in the TV talk show circuit and overall life guru, we can expect that analysts will be pouring into the stock and revising their ratings. In 2015, the analyst calls have largely been neutral to negative, with most of the big names putting their price targets in the $5 to $6 range.

Shares of Weight Watchers were last seen trading up nearly 90% at $12.90 on Monday, with a consensus analyst price target of $6.25 and a 52-week trading range of $3.67 to $29.84.

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