(Bloomberg) -- Weight Watchers International fell in pre-market trading on Friday, after JPMorgan downgraded the stock to neutral from overweight, citing indications of “a weak start to the New Year Resolution enrollment period, which is the key sign up period of the year.”
Analyst Christina Brathwaite also slashed her price target on the stock by nearly 50 percent, dropping it to a Street-low of $37 from $70. The average target is $74, according to Bloomberg data.
Shares slumped 6.4 percent before the bell, extending a lengthy decline that has erased about two-thirds of the company’s value since June. On Thursday, the stock closed at its lowest level since August 2017.
“Current trends will make it difficult for the company to generate significant growth in members,” JPMorgan wrote to clients, citing channel checks for its view on membership activity. “If sales growth comes in below expectations, WTW’s profitability will likely also be challenged.”
The company “could make up for the shortfall in the coming months (particularly as some of the shortfall may be related to the government shutdown as furloughed workers are less likely to start a diet membership),” but JPMorgan sees this as unlikely.
Currently, nine firms have a buy rating on Weight Watchers, while five rate it a hold and zero rate it a sell, according to Bloomberg.
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