On Monday, Xponential Fitness Inc (NYSE:XPOF) shares had its price target lowered by Lake Street Capital Markets following a significant drop in the company's share price. The new target is set at $23, down from the previous $32, yet the firm maintains a Buy rating on the stock.
The adjustment comes after a sharp sell-off on Friday, which saw Xponential Fitness shares plummet by over 30%. The sell-off was triggered by headlines that the analyst believes were disproportionately negative compared to the company's actual financial health.
Despite the market reaction, the analyst emphasized the company's consistent performance, as it continues to meet or exceed earnings estimates.
The analyst's confidence in Xponential Fitness is rooted in the company's steady guidance, which remains unchanged even in the face of recent investigations. The investigations, which have been casting a shadow over the company since June 2023, are not seen as related to the company's financials or fundamentals, according to the analyst.
Lake Street Capital Markets has adjusted the price target to $23 to account for the potential ongoing impact of the investigations on the stock's performance. However, the firm anticipates that the current level of negative sentiment may be overblown and suggests that the risk/reward ratio is now more appealing for investors.
The analyst expects that there may be near-term volatility in the stock's price, but maintains a positive outlook, reiterating the Buy rating. The firm advises that more information on the investigations will likely provide clarity and could influence the stock's future trajectory.
InvestingPro Insights
Amidst the recent volatility in Xponential Fitness Inc's (NYSE:XPOF) stock price, data from InvestingPro provides a deeper look into the company's financial health and market performance. Despite the challenges, management's aggressive share buyback strategy is a signal of confidence in the company's value. Additionally, XPOF's impressive gross profit margins, which stand at 69.61% for the last twelve months as of Q1 2024, underscore the company's strong operational efficiency.
Investors may also find solace in the fact that the Relative Strength Index (RSI) suggests XPOF stock is in oversold territory, potentially indicating a buying opportunity for those looking at technical analysis. However, it is important to acknowledge that five analysts have revised their earnings expectations downwards for the upcoming period, indicating potential headwinds. With a current market capitalization of $423.03M and trading at a low earnings multiple of 3.98, XPOF presents an interesting case for value investors.
For those considering an investment, there are 12 additional InvestingPro Tips available, which can be accessed for a more comprehensive analysis of Xponential Fitness Inc's financial and market position. To explore these insights and more, visit https://www.investing.com/pro/XPOF and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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