WW International (NASDAQ:WW), a global wellness company formerly known as Weight Watchers, jumped as much as 14% Wednesday after an analyst upgraded the stock, but gloomy comments from Federal Reserve Chair Jerome Powell brought the stock back down to earth.
Jefferies analyst Stephanie Wissink upgraded WW International to a buy rating, recognizing the company has grown beyond its original diet business model to a broader and more personalized wellness concept. Wissink went on to note the COVID-19 pandemic might have been a net positive for the company. "We believe the COVID-19 health crisis unlocked a durable trend," she said. "Wellness is being prioritized, supporting superior growth potential."
The analyst team also believes established brands such as WW International have the resources to acquire and retain customers, and then develop those customers into a community. Part of the upgrade was also because Wissink sees the company's digital shift as a way to boost margins and could justify a higher multiple from investors.
Wissink isn't the only analyst bullish on WW International. After the company turned in its first quarter, Oppenheimer analyst Brian Nagel told investors the business was in good shape since proactively cutting costs to preserve liquidity and planning a more aggressive marketing campaign during COVID-19. WW International set a first-quarter record for subscriptions, which were up 9% to 5 million, but it will need to continue evolving to stay ahead of the increasing wellness competition.