This summer, Weight Watchers (NYSE:WTW) is undergoing a major transformation from being simply a “weight loss company” to a full fledged “wellness brand.” The change is an important one as consumers are focusing more on nutrition and overall health rather than simply a number on a scale. As the firm moves forward with less of an emphasis on shedding pounds and more on lifestyle changes, it might be worth considering WTW stock if you believe in the firm’s future growth drivers.

Perhaps the most notable thing Weight Watchers has done over the past few years has been roping in Oprah Winfrey as a board member and spokesperson.

Winfrey’s massive following has been a boon for WTW stock and since she landed her name to the company, the share price has skyrocketed. That’s because not only does Winfrey have a lot of clout among WTW’s key demographic, she also owns a variety of TV, print and digital companies that offer Weight Watchers quite a few marketing opportunities.

Weight Watchers also says that bringing Winfrey and other celebs on board helps with its unique marketing efforts. Rather than simply sharing before and after pictures in order to get potential customers interested, WTW is hoping an increase engagement by allowing people to follow celebrities on their weight loss journey via social media.

That steady sharing of information makes completing a WTW routine much more attainable to the average person and the firm hopes it will help differentiate the company from the wide variety of other weight loss programs out there.

Aside from Winfrey, WTW stock also has powerful backing from other celebs that should help increase brand awareness over the next few years. DJ Khaled, chef Eric Greenspan and comedian Kevin Smith have all joined on as influencers for the company, which is expected to bump up male membership numbers.

WTW Stock Tailwinds

Weight Watchers’ transition to a wellness company couldn’t come at a better time either. Health and nutrition has become a huge focus for consumers and WTW’s revamped points system aligns perfectly with that initiative. Plus, Weight Watchers’ addressable market is massive and growing in size. More than 40% of the U.S. is obese and as Weight Watchers has already been around for years, the firm has a firm position as a recognized and trusted brand in the health and wellness industry.

Plus, Weight Watchers has been working to up its digital game with a new app and the ability to connect to wearables. Again, this is a huge step forward for the company as health and fitness trackers gain traction among the public and become a part of many consumers’ weight loss journeys.

Risks 

Of course, it’s not all necessarily smooth sailing for WTW stock. Even though the company is making a shift toward wellness, there’s a chance it might not be successful in shedding its image as a company focused on losing pounds. Even though Weight Watchers has started adopting WW instead of using its full name, its name alone doesn’t really align with its new brand message.

Then there’s the company’s celeb endorsements, which currently look like a major boon for the company. However, it’s important to note that Winfrey’s participation in the company’s advertising campaign is at her own discretion. Of course, her massive stake in the company and position on its board makes it worth her while to continue participating, but it’s worth keeping in mind anyway.

Finally, it’s important to note that competition is rife in the weight loss space, which will put a great deal of pressure on WTW stock. While the company’s new marketing strategy is commendable, it’s worth noting that the same approach is being taken by literally thousands of independent brands through Instagram and Facebook.

Also, while health and fitness trackers make a great addition to the Weight Watchers program, they also make it more difficult for the company to offer a compelling value proposition to potential clients. With all of the fitness tracking and calorie counting apps that are easily accessible and relatively cheap, Weight Watchers will have to work hard in order to attract new customers. 

The Bottom Line

WTW stock looks like it has a rosy future ahead. The company is helped by economic and social tailwinds and its entourage of celebrity influencers is likely to help boost membership numbers. While there are some risks to the firm’s future plans, I’d say it’s not unreasonable to expect the share price to make its way above $100-per-share over the next few months. 

As of this writing, Laura Hoy did not hold a position in any of the aforementioned stocks. 

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