WW International, Inc. (WW) shares rose more than 10% during Wednesday's session after Jefferies upgraded the stock to Buy with a $32.00 per share price target. Analyst Stephanie Wissink believes that the COVID-19 outbreak has unlocked a "durable trend" as consumers prioritize wellness. She believes that established brands with modern platforms and the resources to cultivate customer relationships are best positioned to capitalize on these trends.
In late April, WW International reported a narrower-than-expected first quarter loss and a 9% increase in subscribers. The company reported a negative impact on recruitments and studio closures beginning in mid-March but reiterated its strong liquidity position and a new $100 million cost-savings initiative.
Oppenheimer's Brian Nagel noted that retention has remained solid and continues to track in excess of 10 months following the first quarter financial results. Nagel believes that Weight Watchers is planning a more aggressive marketing campaign over the next several weeks to address the COVID-19 environment.
From a technical standpoint, the stock has been trending higher since mid-March and is quickly approaching reaction highs of around $28.00. The relative strength index (RSI) is moving toward overbought territory with a reading of 63.08, but the moving average convergence divergence remains strong. These indicators suggest that the stock still has room to run.
Traders should watch for a breakout from reaction highs of around $28.00 toward the 200-day moving average at $31.72 over the coming sessions. If the stock breaks out from those levels, it could retest reaction highs of around $40.00. If the stock breaks down lower, traders could see a move toward the 50-day moving average at $20.23 over the intermediate term.
The author holds no position in the stock(s) mentioned except through passively managed index funds.