Weight Watchers (WTW) to Issue $500M Senior Notes Due 2025

Weight Watchers International Inc. WTW recently announced an offering of $500 million senior notes, due in 2025. The notes will be unsecured and will be guaranteed by the company's subsidiaries. The company intends to enter into a new $150-million revolving credit facility to refinance its existing one.

Share Price Movement

Weight Watchers' share price movement in the past six months has been impressive. The company’s shares have returned almost 78% compared with the industry's rally of just 7.4%. The current level is also higher than the S&P 500’s return of 7.6%.

Coming back to the news, the interest rate, conversion rate and certain other terms of the notes are yet to be determined. The company intends to use the net proceeds of the offering, expected borrowings from a proposed new-term loan facility worth $1,390 million and cash on hand to repay all amounts outstanding under its existing credit facilities. Weight Watchers’ plans to terminate such facilities and pay related fees and expenses.

We believe that the company’s strong balance sheet will help aid in capitalizing investment opportunities and pursuing strategic acquisitions, which will improve prospects. Moreover, the senior notes offering will reduce the company’s cost of capital, thus strengthening balance sheet and supporting growth.

Weight Watchers is the largest provider of weight control programs in the world. The core of their business is weekly meetings, wherein they demonstrate scientifically designed programs, incorporate group support and educate about healthy eating patterns, behavior modification and physical activity.

Zacks Rank & Key Picks

Currently, Weight Watchers carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical sector are PetMed Express PETS, Luminex Corporation LMNX and Intuitive Surgical ISRG.

Notably, PetMed Express sports a Zacks Rank #1 (Strong Buy). The company has a long-term expected earnings growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex represented a stellar return of 6.4% over the last year. The stock flaunts a Zacks Rank #1.

Intuitive Surgical has a long-term expected earnings growth rate of 9.1%. The stock has a Zacks Rank #2 (Buy).

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