Weight Watchers: How to Book Oprah Winfrey as an Intangible Asset

No matter how charming the gecko, nobody is as capable of lifting a stock's price with a single commercial as Oprah Winfrey.

After all, when it comes to Weight Watchers International (WTW), investors have been throwing the traditional value investing rule book out the window. (At what value is an accountant supposed to book Winfrey as an intangible asset?)

To start with, the stock's performance has been all over the place. Investors tend to gobble up more shares every time Winfrey reveals renewed enthusiasm, before quitting the New York-based weight-loss company altogether over fears its recent stock gains merely indicate a dead cat bounce. Not quite the recipe for a healthy diet.

Between December and Winfrey's October announcement that she had taken a 10% equity stake, as well as a seat on the board, shares surged nearly fourfold. Since then the company'smarket cap has been roughly cut in half, as shares tumbled 47%.

In December, the company rolled out its "Beyond the Scale" program, including a "SmartPoints" and new means to personalize goals; in the midst of which Winfrey released an emotional video advertisement extoling the diet program.

"Many times you look in the mirror you don't even recognize your own self because you've got lost, buried, in the weight that you carry," she said. "If not now, when? I feel that way and I know millions of other people feel that way. Are you ready? Let's do this together. "

Shares jumped roughly 19% off the late-December commercial, before tanking 39% so far in 2016. And it appears we won't get a look inside the company's actually performance until its February earnings call.

So what's Wall Street's take? The majority are saying this is a wait-and-see stock.

"Most of Weight Watchers's third quarter occurred before it announced its partnership with Oprah Winfrey and before she appeared on the company's website," Barclays analyst Meredith Adler wrote in an investment note.

"Consequently, all the key measures of the business' health, including revenues, paid weeks, and active subscribers, continued to decline," she said. "Consumers have responded with enthusiasm to the involvement of Ms. Winfrey, which we do not find surprising, and management now believes Weight Watchers will see positive recruitment in the fourth quarter, earlier than previously expected."

While Barclays maintains a $17 price target, the average among its seven listed analysts is $20.75, with 71% reporting Hold positions, according to consensus data compiled byBloomberg.
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