Analysts are already upbeat toward the Oprah-endorsed company
J.P. Morgan Securities initiated coverage on Weight Watchers International, Inc. (NYSE:WTW) with an "overweight" rating and $105 price target -- representing expected upside of nearly 21% to last night's close at $86.90. The brokerage firm said the weight management company's global expansion and social media efforts could help Weight Watchers achieve its $2 billion-plus revenue target over the next two years and boost earnings by more than 20%.
As a result, WTW stock is up 3.9% ahead of the bell, on track to open at a new record high. The Oprah-backed stock has been on fire over the last 12 months, up 224% thanks to strong support from its 80-day moving average. More recently, the shares took a sharp bounce off their 30-day moving average late last month, and are pacing toward a nearly 40% quarterly gain.
Not surprisingly, analysts are extremely upbeat toward Weight Watchers, with every single one in coverage saying WTW stock is a "buy." Plus, the average 12-month price target sits all the way up at $100.80.
Options traders appear to be bullish toward the shares, too. Amid relatively low absolute volume, the equity boasts a top-heavy 10-day call/put volume ratio of 2.64 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- in the 78th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.
Considering nearly 20% of Weight Watchers stock is sold short, some of this activity could be at the hands of short sellers hedging against any more upside risk. Regardless of the reason, premium on short-term WTW options is attractively priced at the moment, per the stock's Schaeffer's Volatility Index (SVI) of 39%, which ranks in the 4th annual percentile. In other words, near-term options are pricing in relatively low volatility expectations at the moment.