Galloway Capital Partners, a significant shareholder in WeightWatchers (WW, Financial) with a 2.87% stake, has voiced its opposition to the rumored Chapter 11 bankruptcy filing. In a communication directed to CEO Tara Comonte, the investment firm highlighted that the company's existing debt does not mature until 2028 and 2029, questioning the rationale behind such a move.
The firm emphasized the positive financial outlook for WeightWatchers, citing its strong fourth-quarter performance. The company has successfully expanded into the compounding business and is experiencing rapid growth in its clinical services, which boast robust profit margins. These developments suggest that WeightWatchers is well-positioned to revitalize its brand in the competitive weight-loss market.
Galloway Capital expressed concerns that a Chapter 11 filing would severely impact shareholders, potentially violating the board and management's fiduciary duties. The firm believes that WeightWatchers is capable of servicing its debt obligations and has the option to negotiate a debt reduction deal in exchange for equity stakes, negating the need for bankruptcy protection.
In the event of a Chapter 11 filing, Galloway Capital warned of potential legal actions, including the creation of an Equity Committee, to safeguard shareholder interests and maintain the company's value.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for WW International Inc (WW, Financial) is $1.00 with a high estimate of $1.10 and a low estimate of $0.90. The average target implies an upside of 284.15% from the current price of $0.26. More detailed estimate data can be found on the WW International Inc (WW) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, WW International Inc's (WW, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for WW International Inc (WW, Financial) in one year is $2.61, suggesting a upside of 902.62% from the current price of $0.260317. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the WW International Inc (WW) Summary page.
WW Key Business Developments
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- WW International Inc (WW, Financial) reported a 58% growth in its clinical business, showcasing strong performance in this segment.
- The company has successfully integrated new features such as an AI-powered food scanner and macronutrient tracking, leading to increased member engagement.
- WW International Inc (WW) achieved a near-record fourth quarter adjusted gross margin of 69.1%, indicating effective cost management.
- The company is committed to removing $100 million in run rate costs by the end of 2025, with the majority already actioned.
- WW International Inc (WW) has expanded its offerings to include one-on-one registered dietician services, which has seen positive uptake.
Negative Points
- WW International Inc (WW) experienced a 10% decline in fourth-quarter revenue compared to the previous year, with a 12% drop in its behavioral business.
- The company faces significant challenges due to its existing capital structure, including approximately $100 million in annual interest payments.
- There is a starting revenue headwind of approximately $45 million for 2025 due to a lower 2024 ending subscriber base.
- The availability of branded GLP-1 medications remains low, with stock checks showing only 6% and 5% availability for semaglutide and trazepatide, respectively.
- WW International Inc (WW) continues to face recruitment challenges in its behavioral business, impacting subscriber growth.
