WW - WW International stock rises over 40% after Sequence acquisition

2023-03-07 11:01:48 ET

WW International ( NASDAQ: WW ) shares surged over 40% on Tuesday as a new acquisition overshadowed a mixed earnings result.

The weight loss company missed on top and bottom lines for the fourth quarter as revenue fell nearly 20% year over year. While subscriber numbers provided some comfort, a major acquisition appeared to overshadow any concerns on the quarterly results.

The purchase of Sequence, a telehealth platform focused on obesity and those with chronic weight issues, is seen as a key opportunity

“While we are still processing recent developments and trends at WeightWatchers, we are initially encouraged with seemingly improving, albeit still choppy KPIs for the company, and the potential for the addition of Sequence to help to catapult WW into a new, rapidly emerging area within health and weight loss,” Oppenheimer analyst Brian Nagel wrote.

He noted that Sequence has grown annual revenue to $25M in just 2 years and already serves tens of thousands of customers. A number of FDA approved treatments are already approved through the platform, adding to WW’s behavioral and nutritional offerings.

Shares of WW International ( WW ) rocketed over 40% higher at an intraday high.

That said, UBS analyst Michael Lasser offered a more cautious take on the acquisition.

“While the deal could bring considerable upside, it also carries sizable risks. The

conversation on the deal might overshadow the challenging trends that continue for

WW,” he advised. This is a business that has been disrupted over the last several years. It's now trying to take big steps to course correct. We think it will take time to see if this action really produces a change in the company's fortunes. In the meantime, we think the stock's risk-reward is balanced.”

Lasser maintained a Hold rating on the stock, a rating still held by most of the Street as of Tuesday .

For further details see: