Shares of Weight Watchers surged Tuesday, a day after the company behind the point-based diet system reported quarterly earnings that beat analysts' expectations.
Weight Watchers (WTW) stock jumped 16% to about $55.50 a share.
The stock has taken a beating since hitting a high of $82 in March. But analysts say the company stands to benefit over the long term from its leading position in the weight loss market at a time when obesity is on the rise.
"We continue to have a positive long-term view of the company and shares appear fundamentally undervalued," said Morningstar analyst Peter Wahlstrom, in a research note.
Weight Watchers said late Monday that earnings per share rose 10% to $1.20 in the third quarter, reflecting the completion of a tender offer and share repurchase program.
Analysts surveyed by Thomson Reuters were expecting earnings of $1.07 per share.
Despite the larger-than-expected gain in earnings per share, Weight Watchers said net income fell 16% in the quarter to $67.4 million, and sales were marginally higher at $430.6 million.
Weight Watchers also lowered the top end of its projected profit for the year to $4.10 per share from $4.20 per share previously.
On the bright side, the company continued to grow its online subscriber base, rising 20% for the year to 2 million.
Talk about a good weight gain. Little-known Arena Pharmaceuticals just got a big boost from the FDA, which gave its stamp of approval on the company's weight loss drug, known as Belviq.
The news sent shares of Arena (ARNA) surging 35%, giving it a year-to-date gain of a whopping 428%. Not bad for a company that not many mainstream folks have heard of. That could be good news for Vivus (VVUS), MORECatherine Tymkiw - Jun 27, 2012 3:21 PM ET
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