Benzinga - Shares of WW International Inc (NASDAQ:WW), the parent company of diet and fitness platform Weight Watchers, jumped almost 60% on Tuesday after a Goldman Sachs (NYSE:GS) analyst upgraded the stock and substantially raised its price target from $3.80 to $13.
The upgrade came after WW confirmed the purchase of Sequence, a telehealth provider that connects patients with doctors who can prescribe weight-loss drugs like Ozempic and Wegovy.
Yet one influential fund manager does not agree with Goldman Sachs.
Gary Black, managing partner of The Future Fund — the firm behind the Future Fund Active ETF (NYSE:FFND) — said that Goldman Sachs' thesis implied Weight Watchers members will pay Sequence $90 a month to get access to drugs such as Wegovy and Mounjaro, when the average member today pays a monthly $23.
"The flaw with the thesis: most insurance plans won't cover the cost of these drugs," wrote Black on Twitter.
Without insurance coverage, these drugs cost patients between $840 and 1,200 a month, says Black, and only 20% of insurers cover them for the clinically obese.
The fund manager said his firm would take a completely opposite stance, shorting WW stock, an action done when fund managers expect the price of a stock to decline over time.
Also Read: What Is Short Selling Stocks? A Beginner's Guide to Short Selling
Meanwhile, Goldman Sachs analyst Jason English said if WW can grab just 3% of the total addressable market for weight loss drugs in the U.S., it could add $2 in earnings per share.
Black called the WW rally a deja-vu. On March 7, WW stock climbed 70% in one day, to later quickly return to their original price.
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| Feb 2022 | Wells Fargo | Downgrades | Overweight | Equal-Weight |
| Feb 2022 | Morgan Stanley | Maintains | Equal-Weight | |
| Jan 2022 | Odeon Capital | Downgrades | Buy | Hold |
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