Services

The Oprah Effect Is in Full Swing With Weight Watchers Earnings

Chris Lange

Published: November 6, 2015 11:40 am

Last Updated: January 13, 2020 5:27 pm

Weight Watchers International Inc. (NYSE: WTW) is seeing is the Oprah effect come through in full force. Over the past quarter, this stock has skyrocketed 185% to Thursday’s close. Considering this earnings report, the future looks bright. With Oprah Winfrey on the board and a solid outlook on the year, this may be the biggest turnaround we’ve seen this year.

As one of the biggest names out there, Winfrey has a huge following. Seemingly whatever she touches absolutely dazzles consumers and draws attention to her endorsements. For example, in the past her book club has allowed for many authors, some previously unheard of, to rise to prominence. From what we’ve seen so far, the Oprah effect has undoubtedly tipped the scales in favor of Weight Watchers.

The company had $0.39 in earnings per share (EPS) on $273.3 million in revenue. That compared to Thomson Reuters consensus estimates of $0.29 in EPS on revenue of $273.30 million. The same period from the previous year had EPS of $0.68 and $345.20 million in revenue.

In terms of guidance for the 2015 full year, the company now expects EPS in the range of $0.64 to $0.74, up from its previous $0.57 to $0.72. The consensus estimate for the full year is $0.67.

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Jim Chambers, president and CEO of Weight Watchers, commented on earnings:

In December, we will be launching a comprehensive program innovation as we expand our purpose from weight loss alone to more broadly helping people lead healthier, happier lives. The response to our groundbreaking partnership with Oprah Winfrey has been terrific. I am thrilled about the impact it will have on accelerating our transformation.

For some background: in mid-October the company announced that it had joined forces with Winfrey, after she disclosed a 10% stake in the weight loss program. She has been appointed to the Weight Watchers board of directors as well.

As 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.

Considering this endorsement by one of the most powerful names in the TV talk show circuit and overall life guru, we can expect that investors will be pouring into the stock. This has been the case since she announced her stake, but looking ahead a question to ask is: Will the Oprah effect run out of gas?

Shares of Weight Watchers were trading up more than 35% Friday to $22.90. Note that the consensus analyst price target is still only $8.50, suggesting analysts may not be on board yet. The 52-week trading range is $3.67 to $29.70.

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