WW stocks have risen nearly 75% in the past six months alone and are not far from their 52-week high.
The company has had an impressive success under the leadership of CEO Mindy Grossman, who left the HSN purchasing network in 2017 to take over the position of WW CEO.
WW presented a new "wellness" program called myWW in November. The program has three different weight loss plans, but also emphasizes fitness and other healthy lifestyle habits, rather than just going on a diet and counting calories and points.
The WW rally is impressive. However, many on Wall Street are wondering whether the stock needs to take a breather.
According to Refinitiv, the consensus price target for WW for analysts is just under $ 38 per share. That's almost 10% below the current share price of around $ 42.
It can be too early to tell if dieters are really going to stick to their weight loss plans. This is the main reason why Linda Bolton Weiser, analyst at D.A. Davidson downgraded WW shares in November. Your new target price is $ 33.
Time for a diet on the WW share price?
At the time, Weiser wrote in a report that there was "uncertainty about the marketing of diet seasons". She said in another report later in November that the new myWW program was good, but "it is certainly not unique, as other weight loss programs (including Nutrisystem) also focus on more personalization."
Concerns about increasing competition from keto and paleo diets were also a problem for the WW. However, the company is resisting these trends.
This has helped put WW at the top of Google's search rankings for weight loss plans.
"WW shares have peaked in December, which we believe is partly due to unrest about competitor weight loss programs and the persistence of keto and paleo," said Olivia Tong, analyst at BofA Global Research, in a report ,
"However, we are encouraged by WW's resilience in search queries compared to these alternatives. Keto remains king, but search volume has decreased significantly since last year," added Tong. It has a buy recommendation for WW and a price target of USD 45.
However, uncertainty about the WW is likely to continue in the next few weeks. The company should report fourth quarter and full year earnings at the end of February (and a first look at the 2020 forecast).