Shares of Weight Watchers parent extend their bounce ahead of Oprah TV special

By Emily Bary

WW's stock has been under pressure, but one analyst thinks an upcoming Oprah Winfrey TV special could highlight promise of the company's clinical business

Shares of Weight Watchers' parent company are continuing to claw their way back in Monday action, with one analyst recently noting that an upcoming Oprah Winfrey TV special could prove a catalyst.

WW International shares (WW) have fallen under pressure lately, after Winfrey was revealed to be leaving the company's board of directors when her term ends in May and donating her stake in the company.

Read: Oprah's departure from WeightWatchers' board is the latest bad news for the stock, amid weight-loss-drug frenzy

The stock is up 11% in Monday afternoon trading, however, after rising 21% in Friday's session on the company's announcement that it expected to beat its prior first-quarter guidance for clinical subscribers. Shares are still down 39% over the past month.

Monday's rally comes as Winfrey prepares to host a TV special focused on weight loss on ABC Monday evening. She previously revealed that she's taking a weight-loss drug, and her special, titled "Shame, Blame and the Weight Loss Revolution," will feature conversations with doctors and segments with patients who've taken new GLP-1 weight-loss medications.

Opinion: Oprah to host ABC special on weight-loss drugs. Why people should stop criticizing her for taking them.

"While we do not know with certainty, we would not be surprised if the special contains positive commentary about pairing GLP-1 drug therapies along with a clinically guided behavior-modification program," Guggenheim Securities analyst Jack Wallace wrote in a note to clients Thursday.

In April, WW acquired Sequence, a prescriber of weight-management and diabetes drugs. The TV special "could be a positive read-through for WW's Clinical program," Wallace wrote.

He reiterated a buy rating in his note to clients last week, writing that he was "unconcerned about WW's ability to service its debt."

See also: This investor made billions on Weight Watchers over 23 years and got out just before the stock imploded

"Despite the high leverage" of about nine times as of the fourth quarter, he and his team think "WW will have no problem covering interest payments on the debt and will ultimately be in a much better position to recapitalize the company in 2-3 years after the Clinical business scales."

Further, "any worries about a recapitalization or default this year are overblown," he added. His $12 price target is more than 350% above current levels.

-Emily Bary

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03-18-24 1533ET

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