Investing.com – Shares of Weight Watchers International surged on Thursday as JPMorgan upgraded its outlook on the stock, ditching its bearish outlook on the company, citing a stabilized subscriber trends.
JPMorgan upgraded its investment rating on Weight Watchers (NASDAQ:) to neutral from underweight and raised its price target on the stock to $22 from $17, sending the stock more than 7% higher.
“We believe that steps taken to redirect the marketing message to dieting have worked to stabilize recruitment trends,” JPMorgan (NYSE:) analysts wrote in a note to clients.
The health and wellness company saw its stock tumble nearly 30% on Feb. 26 after its fourth-quarter results and guidance fell short of Wall Street’s expectations, prompting downgrades from a slew of analysts. The stock had already been falling badly from a 52-week high of $96.47 reached in July 2018. It bottomed at $16.71 on May 31 and is 42% since.
Still, the shares are down 42% for 2019.
Analysts had blamed the company’s weaker quarter results on a plunge in subscriber growth amid poor communication about the shift to a more of wellness company than a weight loss company.
But JPMorgan said the slump in earnings this year was starting to take a backseat to the potential growth opportunity brought on by the launch of a new diet program.
“We believe investors are beginning to look past the expected ~50% earnings decline this year and instead focus on the potential growth opportunity in 2020 following the launch of a new diet program at the end of this year,” the bank said.
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