Weight Watchers International, Inc. (WTW) shares rose nearly 10% in early trading on Wednesday after the company reported better-than-expected fourth quarter financial results. Revenue rose 16.9% to $312.5 million – beating consensus estimates by $4.93 million – and net income of 37 cents per share beat consensus estimates by six cents per share. Management anticipates full-year revenue of $1.55 billion versus a consensus of $1.44 billion and earnings per share of $2.40 to 2.70 versus a consensus of $1.90.
Weight Watchers stock has risen more than 75% over the past three months after the company implemented a turnaround plan that has more than doubled profits over the past two years. After the launch of the Freestyle program in December, the company ended the fourth quarter with 2 million online subscribers and 3.2 million total subscribers. (See also: Oprah's Weight Watchers Bet Finally Paying Off.)
From a technical standpoint, the stock rebounded from lower trendline support toward the middle of its price channel earlier this week. The relative strength index (RSI) moved toward overbought levels at 62.88, while the moving average convergence divergence (MACD) remains in a slight bearish downtrend. These dynamics suggest that the stock could see some consolidation above R1 resistance at $73.68 in the near term.
Traders should watch for a breakout toward upper trendline and R2 resistance at $83.06, which would put the stock at its all-time highs. If the stock breaks down below lower trendline support at $70.00, traders should watch for a move to the 50-day moving average at $60.93 or the pivot point support at $59.49, although this scenario seems less likely. (For more, see: Weight Watchers Stock Breaks Out of 4-Week Base.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.