Auriga Maintains a 'Hold' on Weight Watchers (WTW); First Look At Disappointing Q1

May 3, 2012 1:03 PM EDT
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Auriga maintains a 'Hold' on Weight Watchers (NYSE: WTW) price target of $88.00.

Analyst, Gary Albanese, said, " WTW reported results that was below our expectations as well as consensus estimates. For the quarter, revenue was $503.5 million, which was roughly flat with the prior year, but below our $505.5 million estimate and consensus estimate of $505.7 million. However, Weight Watchers' EPS of $0.74 was below our $0.80 estimate as well as consensus of $0.78...While part of the North America problem stems from the corporate difficulties, the UK problems is derived from an ineffective marketing campaign that relied upon ordinary customers. Online Continue to Growth; Should Benefit Gross Margins this year. customers grew 35%, by paid weeks, in Q1 which was close to expectations. Management still believes a 30-35% online growth rate is possible for the entire year. The key for the online business growth is that is carries significant gross margins, which is expected to increase the company's total gross margins by about 200 bps this year."

For an analyst ratings summary and ratings history on Weight Watchers click here. For more ratings news on Weight Watchers click here.

Shares of Weight Watchers closed at $76.01 yesterday.

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