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Why Weight Watchers International, Inc. Shares Gained Today

By Brian D. Pacampara, CFA - Feb 9, 2016 at 2:50PM

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The company's deal with Oprah Winfrey might be paying off sooner than expected.

What: Shares of weight management services specialist Weight Watchers International (WW 2.17%) surged as high as 20% on Tuesday after positive comments from a Wall Street analyst.

So what: Weight Watchers shares have fizzled during the past couple of weeks after their 20% Oprah-fueled pop last month, but a bullish report from ITG Investment Research today suggests that the company's partnership with the media queen is paying off where it counts most: subscriber growth. Of course, the shares have quickly slimmed down from its Tuesday highs, and are now only up about 3% at the time of this writing, giving investors plenty of frustration over yet another short-lived Oprah-centered surge. 

Now what: ITG now expects Weight Watchers to post about $260 million in sales in Q4, above the average analyst estimate of $257 million, on new membership growth of roughly 35%. "The improved trends can perhaps be partially attributed to the ownership deal with Oprah that was finalized in October," said Tomlinson. Given the company's still-heavy debt load and volatile shares, however, I'd wait for more concrete proof of Oprah's influence before jumping in. 

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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