Weight Watchers shares are going parabolic again.
After rallying more than 100% on Monday, shares were up by as much as 30% in morning trading on Tuesday.
The company announced that Oprah Winfrey was joining its board and bought a 10% stake of newly issued stock. Oprah made about $US70 million on Monday’s share price spike.
And analysts consider Oprah’s involvement as a big endorsement for the brand. On Tuesday, Barclays analysts upgraded the stock’s rating and wrote:
“The news yesterday that Oprah Winfrey was investing in the equity of WTW and would help market and promote the program is a major coup for the company. It confirms our view that the Weight Watchers brand has value, though we were not creative enough to foresee this move as a way of realising that intrinsic value.”
They upgraded their rating to “Equal Weight” from “Underweight” with a new price target of $US14 from $US5, a 180% increase.
The analysts also increased their fourth-quarter earnings-per-share estimate by $US0.01 to $US0.07.
Weight Watchers shares are still down 29% year-to-date.
Here’s a chart showing the stock over the past five days: