Weight Watchers Stock Options Bear Poised to Profit

J.P. Morgan set a bruising price target on WTW stock

Feb 27, 2019 at 9:30 AM
facebook X logo linkedin


The shares of Weight Watchers International, Inc. (NASDAQ:WTW) are bracing for a big drop out of the gate, after the weight loss specialist's disappointing earnings report was met with a round of bearish brokerage notes. And even news major stakeholder Oprah Winfrey will take a key role in the company's upcoming marketing campaign can't save the stock, with WTW shares down 35% ahead of the bell -- set to trade below the $20 per-share mark for the first time since April 2017.

For the fourth quarter, Weight Watchers reported earnings of 63 cents per share on $330.4 million in revenue -- much less than analysts were expecting. Additionally, the firm forecast lower-than-anticipated 2019 revenue, and said a soft start to the critical winter season will negatively impact this year's member recruitment numbers.

In reaction, KeyBanc, Oppenheimer, Craig-Hallum, and D.A. Davidson all downgraded WTW stock to the equivalent of a "hold." Plus, following last week's downgrade, J.P. Morgan Securities added Weight Watchers to its U.S. focus list as a top short idea, and slashed its price target to $14 from $25 -- a nearly 53% discount to last night's close at $29.57.

While WTW stock is all but certain to land on the short-sale restricted list today, short sellers will likely be cheering today's sell-off. Short interest spiked 142% in the most recent reporting period to 10.36 million shares, representing 17% of the equity's available float.

One WTW options trader stands to profit big on today's expected post-earnings slump, too. Specifically, a block of 3,845 March 30 puts was bought to open back on Feb. 8 for $4.10 apiece. Should today's pre-market price action pan out, the put option's price will most certainly spike.

UPDATE, 10:15 AM: Weight Watchers stock was most recently seen trading down 35.3% at $19.14, earlier hitting a 22-month low of $18.80. Meanwhile, the March 30 puts were last asked at $11.

 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!

 

 
 
 


 
 

Rainmaker Ads CGI