Great Quarter for WW on Solid Demand, Maintain Buy

2/7 - "WW recorded another great Q, w/ revs of $447M beating us by $25M. The Q’s 22% YoY growth is the highest recorded by our model, as recent European acquisitions contributed to topline, and organic growth (in cc) remained impressive at 9% YoY. EBITDA was $12.4M above our est., w/ 17.4% margin beating us by 190bp. EPS of $0.82, beat us by $0.13."

"As was evidenced in its FY2Q08 results, we believe that WW continues to see healthy demand across practice lines and geographies and remains well positioned to overcome any near-term disruptions from a potential economic downturn given its global mix of business, well diversified portfolio of offerings, (several of which are relatively acyclical), and a substantial proportion of recurring revenues."

"Our $55 PT presumes a P/E multiple of 17x our CY2008 EPS of $3.21, in line with the mean of where the peer group trades. Moreover, due to the strong cash flow characteristics, shares also look cheap on EV/EBITDA, trading at just 6.7x CY08 EBITDA, a 13% discount to peer average, and a 2009 FCF yield of 4.9% (2008 is understated due to acquisition). Our DCF ranges from $52- $60 (WACC 10.2%). Risks include a global economic slowdown, share overhang, integrating acquisitions and regulatory changes."