How Ozempic Just Sent Weight Watchers (WW) Stock Up 30%
For months, the healthcare community has been focused on a new drug. The brand name of semaglutide, Ozempic, first gained notoriety as a method for treating Type 2 diabetes. However, it didn’t take long for it to garner a new reputation,…
For months, the healthcare community has been focused on a new drug. The brand name of semaglutide, Ozempic, first gained notoriety as a method for treating Type 2 diabetes. However, it didn’t take long for it to garner a new reputation, one that sufficiently broadened its market and applications. In September 2022, Variety described Ozempic as “Hollywood’s secret new weight loss drug,” touting Ozempic’s popularity among celebrities who have found it highly effective at assisting in weight loss. Ozempic’s ability to regulate insulin and lower blood sugar levels can help people feel fuller, faster, and longer. This quickly led to a nationwide Ozempic shortage, as people without diabetes rushed to procure the drug for fitness-related purposes. Now WW International (NASDAQ:WW), formerly Weight Watchers, has found a way to leverage this demand through a strategic acquisition, sending WW stock soaring.
This is an interesting development for the weight loss giant, whose acquisition may help consumers access Ozempic. Let’s take a look at the deal and what investors should be expecting.
What’s Happening With WW Stock
On March 6, the Wall Street Journal reported that WW International had inked a deal to acquire digital healthcare firm Sequence. Since then, WW stock has been rising steadily and shows no signs of slowing down. As of this writing, it is up more than 32% for the day. It’s been a highly volatile six months, but WW has traded primarily in the green through it all.
Sequence is a subscription-based service offering customers telehealth appointments with doctors who can prescribe drugs. This means access not just to Ozempic but also to Wegovy, a similar drug that features a higher dose of Ozempic’s active ingredient. The New York Times reports that TikTok influencers have been touting the drug’s benefits for months, but someone with even more clout has also endorsed it. Tesla (NASDAQ:TSLA) CEO Elon Musk tweeted about it in October 2022 and seemingly found it effective.
— Elon Musk (@elonmusk) October 2, 2022
Of course, access to Ozempic and Wegovy won’t be the only new asset for WW following the deal. But at a time when many people want a drug that is in short supply, it’s easy to see why any exposure to this lucrative product would help push shares up in the short term. As the WSJ reports:
“WW says it sees the new obesity and diabetes medications as an adjunct to its existing offerings including its cornerstone eating plan, where users track what they eat and drink and aim to stay within a certain number of daily “points.”
WW’s chief scientific officer, Dr. Gary Foster, also emphasized that the company doesn’t intend to use this new asset to prescribe these treatments to people seeking quick weight loss solutions. But the market for Ozempic and Wegovy is still vast. According to the Centers for Disease Control (CDC), the number of Americans with diabetes is roughly 37 million. 90-95% of these patients have Type 2, which is spreading to younger people. The market will expand even further if doctors begin prescribing it for weight loss purposes.
What Comes Next
This new catalyst is exactly what WW stock needed to remind investors not to count it out. While it has fallen significantly from where it traded in 2021, as InvestorPlace markets analyst Thomas Yeung notes, it provides considerable upside for investors who don’t mind some risk.
Now that the company may be about to help consumers access some of the market’s most sought-after drugs, investors have even more reason to bet on it before it skyrockets even further. This acquisition could easily take WW stock well above penny stock levels.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.
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