How Good Are Stock Analyst Upgrades & Downgrades? – Weight Watchers

July 23, 2019

A few days ago, DA Davidson upgraded WW stock to buy from neutral and said investor expectations for the 2020 diet season are too subdued. "WW has already reported improved recruitment trends, chatter on app download data indicates stabilization of subscriber trends, and our proprietary analysis of Reddit comments indicates keto interest could be fading," analyst Linda Bolton Weiser wrote in a note to clients. "Our data also show improved sentiment toward the meeting experience in 2Q19 vs. 1Q19.

The analyst said proprietary research finds brand sentiment up strongly in the second quarter after a decline in the first quarter. DA Davidson generates monthly and quarterly sentiment scores by scraping relevant comments from Reddit and YoutTube. 

While I don't disagree with Ms. Bolton Weiser that things are improving at WW, I do question her research methodology that led to her conclusions. She makes it seem like DA Davidson has some kind of inside data or tool that confirms improvements or declines in WW subscribers and revenues. They do NOT. Scraping comments from Reddit and You Tube hardly represent an adequate method. Just how many such comments has DA Davidson looked at? 500, 1,000, 5,000? We doubt it's that many and even if it was, is a sample of that size representative enough for a company with millions of customers? I think not. Did these comments reflect the opinions of people in Europe as well as the U.S.? We just don't know.

DA Davidson and Ms. Bolton Weiser are just as much in the dark as to what's really happening at WW as the rest of us, until their next quarterly earnings call.

".. improved sentiment toward the meeting experience..." - What exactly does that mean, and how can one translate that into subscriptions and dollars? Not everyone who feels more positively toward group meetings will actually sign up, for the in-center program or online program.

As always, when it comes to Wall St. analysts and their tracking of the weight loss market, take their opinions with a big grain of salt.

Additional Information About The Weight Loss Market - Contact John LaRosa at Marketdata or see our website at: marketdataenterprises.com. Marketdata has tracked the weight loss market for 30 years, independently, with 50+ published market research studies covering retail, DIY, medical and commercial programs.

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