Oscar Gruss Downgrades Weight Watchers (WTW) to Sell; I'll Choose Liposuction

Oscar Gruss downgraded Weight Watchers (NYSE: WTW) from Hold to Sell with a price target of $70.00.

Analyst, Louis Meyer, said, "We view the recapitalization as a financial crutch meant to compensate for some of the expected business growth headwinds that the Company faces in 1H12. WTW reported middling 4Q11 results in conjunction with announcing the share buyback. WTW expects to have higher-than-normal marketing expenditures as it attempts to reinvigorate flagging sales growth. Nutrisystem, Inc. (Nasdaq: NTRI), a small cap that is a direct competitor, is forecasting a 1Q12 EPS loss due to promotional expenditures that are being invested to grow demand during 2012. The market has penalized the Company in the past for a loss of growth momentum. We believe that the uncertain industry dynamics combined with the high debt leverage make the case for discounted valuation multiples near term. The Sell rating reflects our belief
that the stock price has yet to fully digest the implications of tougher revenue growth."

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 $74.48 yesterday.

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