WW International stock (NASDAQ: WW) has declined by close to 34% year-to-date to levels of around $10 per share. The stock has been on a weak footing for some time now, as the company’s digital business, which relies on mobile apps to provide services and proved a big driver of the stock’s rally through the pandemic, witnesses declines. For instance, over Q4 2021, the company’s digital subscriber base fell 7% year-over-year to about 3.4 million. As the digital narrative dies down, investors have been reevaluating WW stock’s positioning as a tech stock, assigning it a lower valuation. Moreover, the trend of people staying at home and focusing on health and fitness cooled off following the easing of Covid-19 lockdowns, leading to declining revenues. Competition in the weight management and fitness space has also been mounting, given the slew of weight management apps as well as a growing number of independent experts on various social media platforms. Over Q4 2021, WW International’s revenue declined 14.7% year-over-year to $276 million, missing Wall Street estimates. Separately, WW International’s in-person workshops haven’t seen much of a recovery, despite the easing of Covid-19 restrictions and the reopening of physical spaces, with subscribers remaining roughly flat year-over-year at 0.7 million at the end of Q4.
So is WW International stock still worth looking at after this big sell-off? The company is taking a couple of steps to revive its business. For instance, the company is running new ad campaigns featuring celebrities including Oprah Winfrey and James Corden, while also rolling out a program called PersonalPoints, which completely customizes weight loss plans for each member. WW is also looking to build a diabetes-focused business, with a dedicated offering with specific content and coaching for people with chronic disease, by later this year. That being said, it remains to be seen if these steps will be enough for the company to boost growth in the current competitive environment.
We’ve reduced our price estimate for WW International to $17 per share, from a previous estimate of $24, due to the company’s slowing business. However, our price estimate is still almost 70% ahead of the current market price of $10. Following the big sell-off, WW stock trades at just about 6x 2022 consensus EPS. At these prices, the risk-to-reward positioning for WW stock appears favorable. With the Federal Reserve indicating multiple rate hikes in 2022, it’s very possible that value stocks could gain some traction and this could help the stock. See our analysis WW International Valuation: Expensive or Cheap for more details on WW’s valuation and comparison with peers. Check out our analysis on WW International Revenue: How does WW Make Money for an overview of WW’s business model, key revenues streams, and how they have been trending.
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