Weight Watchers Shares Tumble on Higher Spending (WTW)


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Weight management specialist Weight Watchers International, Inc. ( WTW ) late Tuesday posted better-than-expected third quarter earnings and boosted its full-year outlook, but shares plunged in aftermarket trading on concerns about the company's higher marketing and internal spending.

The New York-based company reported third quarter net income of $1.09 per share on revenue of $428.4 million. On average, Wall Street analysts expected a much smaller profit of 94 cents per share, on lower revenue of $411 million.

Looking ahead, the company said it now expects full-year earnings of $4.05 to $4.10 per share for the year, marking the third time in 2011 the company has raised its forecast. Analysts currently are looking for earnings of $3.98 per share for the year.

On a sour note, WTW noted that marketing expenses jumped 20% in the lastest quarterm while administrative rose 14%. CEO David Kirchoff commented, "As we enter 2012, we remain cautious about the uncertain economy and … assume competition from other commercial weight loss competitors will be robust."

Weight Watchers shares fell $6.84, or -9.5%, in premarket trading Wednesday.

The Bottom Line
Shares of Weight Watchers ( WTW ) have a .97% dividend yield, based on last night's closing stock price of $71.84. The stock has technical support in the $60-$63 price area. If the shares can rebound, we see overhead resistance around the $76-$80 price levels.

Weight Watchers International, Inc. ( WTW ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.2 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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