Shares of WW International Inc.
WW,
+46.12%,
the parent of Weight Watchers, soared on heavy volume Tuesday after the weight-management and wellness company said the deal to buy the telehealth company doing business as Sequence has been completed.
The acquisition of Sequence, which is part of Weekend Health Inc., provides WW with a prescriber of weight-management and diabetes drugs.
“Given the advancements in chronic weight management medications, entering into clinical interventions, for those who medically qualify, is a natural next step for WeightWatchers,” said WW Chief Executive Officer Sima Sistani. “Our goal is to provide sustainable, science-backed solutions to all weight health pathways, whether medications are part of an individual’s journey or not.”
WW’s stock rocketed 42.3% in morning trading Tuesday, which puts it on track for the biggest one-day gain since March 7, when it powered up 79.1% after the deal to buy Weekend Health was first announced. Trading volume ballooned to 26.9 million shares, compared with the full-day average of about 6.9 million shares.
After the stock closed at a seven-month high of $6.93 on the day the Sequence deal was announced, it had tumbled 40.5% through Monday. With Tuesday’s rally, it was still about 15% below where it had closed on March 7.
“We think it’s a very positive sign for the future of obesity medicine that such a well-known company is looking to learn from obesity doctors and is expanding their weight-management programs to include Sequence,” said Sequence co-founders Remi Cossart and Calvin Yount and the company’s medical director, Spencer Nadolsky.
D.A. Davidson analyst Linda Bolton Weiser said in a recent note to clients that current diabetes drugs that can lead to weight loss, known as glucagon-like peptide 1 (GLP-1), are more effective than older weight-loss drugs, have few side effects and are easy to use. The downsides are that costs for the drugs are high and that patients often regain weight after stopping use of the drugs.
Weiser reiterated the buy rating she’s had on WW’s stock for at least the past three years and kept her price target at $9, which implies a further 53% gain from current levels.
WW shares have run up 51.8% year to date, while the S&P 500
SPX,
+0.02%
has advanced 7%.
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