WW International (WW 10.06%) was going through quite a slimdown this week, at least as far as its stock was concerned.
Investors traded out of the WeightWatchers parent company following a downbeat note from a researcher, and the introduction of a competing product from a top healthcare company. According to data compiled by S&P Global Market Intelligence, the stock had lost over 22% of its value week to date as of early Friday morning.
Barclays says WW International is a sell
The new year didn't start off well for WW International. On Tuesday, the first trading day of 2024, Barclays initiated coverage on the stock with an underweight (read: sell) recommendation at a price target of $8 per share.
That was a prescient call, as only two days later healthcare giant Eli Lilly launched a new e-commerce platform called LillyDirect. The company didn't hesitate to mention that LillyDirect specifically targets customers "living with obesity, migraine, and diabetes."
That was hardly an accident, as the rollout comes shortly after Lilly began marketing Zepbound, its weight loss drug that competes with Novo Nordisk's massively popular Wegovy. By extension, it also competes with the classic weight-shedding routines and diets that form the core of WW International's business.
Investors might have overreacted
Neither development is positive. However, a 22% sell-off feels drastic. WW International still operates the well-known and therefore powerful WeightWatchers brand, and has a wide user base. While the Eli Lilly platform will doubtless offer significant competition, WW International had advantages it can leverage in the fight.
