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Why Is Weight Watchers (WTW) Stock At New High?

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Shares of Weight Watchers (WTW - Free Report) climbed over 5.30% on Wednesday to hit a new 52-week intraday trading high. Now, amid the height of New Year’s Resolution season, investors want to know: can the company that saw its stock price skyrocket in 2017 repeat that success in 2018?

Weight Watchers saw its stock price hit $63.10 per share in morning trading Wednesday. This big surge comes just over a week after shares soared 13% on Monday Jan. 8, following major investor Oprah Winfrey’s much-talked about Golden Globes speech, which spun into further speculation that the media mogul could possibly run for president.

Winfrey spent $43 million for a 10% stake in the struggling diet firm in late 2015. Shares of Weight Watchers have jumped a ridiculous 367% over the last 52 weeks, and many point to greater involvement from Winfrey—who now acts as the face of the weight loss company—as a primary reason.

This is all great news for Winfrey, Weight Watchers, and current investors. But can Weight Watchers carry its 2017 success into the New Year?

Fundamentals

Weight Watchers Q3 revenues were up 15% year-over-year, while its total paid weeks jumped 20%. The company’s EPS climbed from $0.53 per share to $0.65 per share. The strong quarter led the company to raise its full-year 2017 EPS guidance from a range of $1.57 to $1.67 to a $1.77 to $1.83 range.

Looking ahead to the fourth-quarter, the New York-based company’s sales are projected to gain 15.69% to hit $309.35 million, based on our current Zacks Consensuses Estimates. Weight Watchers’ Q4 EPS is projected to expand by 63.16% year-over-year to reach $0.31 per share. For the full year, the company is now expected to see its earnings soar by 63.92%.

What’s New?

To kick off the New Year, Weight Watchers added a new spokesman to complement Winfrey. Weight Watchers announced on Jan. 1 that widely popular music artist DJ Khaled would become the brand’s social media ambassador, as he sets out to make a shift towards a healthier life for himself after the birth of his child.

Khaled boasts 9.1 million followers on Instagram and 3.95 million on Twitter (TWTR - Free Report) , while some 3.4 million people also like and follow his Facebook (FB - Free Report) page. What’s more, the music star’s Snapchats (SNAP - Free Report) receive about 3 to 5 million views each. His reach on social media to a younger and more diverse audience might prove highly effective for Weight Watchers, which wants to add and retain new members at the lowest cost possible.

In 2018, the company wants to become more than just a short-tem diet fix. Weight Watchers hopes to transform into a long-term lifestyle coach. “We’re moving beyond a diet to a holistic way of helping people have better habits,” CEO Mindy Grossman recently told the Wall Street Journal. “You should think of us as your daily partner to inspire you to be healthier.”

Before New Year’s Resolution season—which is the company’s biggest recruitment period—it changed its eating plan to make it easier for clients to follow through. Now, members have more than 200 foods that they can eat in unlimited quantities. The move was made to make cooking much easier for customers. Weight Watchers expects this will encourage members to stay longer.

To kick off 2018, the company also earned some honors that might attract new customers. U.S. News & World Report listed the company as #3 on its list of the "Best Diabetes Diet.” Last year, Weight Watchers came in at #11. Furthermore, the company earned the #1 spot for "Best Fast Weight-Loss Diet" for the second consecutive year.

Being named on these lists should theoretically help Weight Watchers attract new customers because more than 100 million U.S. adults currently live with diabetes or pre-diabetes, according to a Centers for Disease Control and Prevention report published in July.

These are nothing short of crisis-level figures, as nearly a third of American’s are now afflicted. What’s more, the disease was the seventh leading cause of death in the U.S. in 2015, according to the report.

It seems that Weight Watchers has a ton of positive momentum on its side, but only time will tell if that translates into another outstanding year. The company is expected to reports its Q4 results on Feb. 27.

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