On Monday, Evercore ISI maintained a positive outlook on Xponential Fitness Inc (NYSE:XPOF), reiterating an Outperform rating alongside a steady $35.00 price target. The firm's stance on the company remains optimistic, highlighting the robust background of the new CEO, who brings experience from significant franchising sectors.
The company's leadership, with a history that includes TaylorMade, adidas North America, and Taco Bell, is praised for its potential to drive growth. The CEO's tenure at Taco Bell was notably marked by growth and competitive performance, which is seen as a beneficial attribute for Xponential Fitness.
Evercore ISI's confidence in Xponential Fitness is rooted in the expectation that the CEO's experience in large-scale franchising will be an asset. The sectors of restaurant and hotel franchising were particularly noted as industries with the requisite scale and size to provide the necessary background for leading XPOF effectively.
The firm's analysis suggests that the CEO's career trajectory, which has spanned across various high-profile brands, equips him with a solid foundation for his role at Xponential Fitness. The company is anticipated to benefit from this leadership, as it aims to excel in the competitive fitness industry.
In other recent news, Xponential Fitness Inc. has seen significant developments. The company finalized the divestiture of its Row House brand to Extraordinary Brands, a move that aligns with its strategic refocusing on its core brand portfolio. This transition isn't expected to materially affect the company's revenue or EBITDA for 2024, with financial guidance remaining unchanged.
The company also saw a leadership transition with the resignation of CEO Anthony Geisler, and the appointment of Interim CEO Brenda Morris. Despite this, Xponential Fitness reported a record high membership count of 796,000 in April, indicating strong brand appeal.
In terms of analyst ratings, Roth/MKM initiated coverage on Xponential Fitness, assigning a Buy rating with a price target of $22.00. This optimistic outlook is based on the company's strong fundamentals and growth trajectory.
However, Baird reduced the company's stock price target from $14 to $10, maintaining a Neutral rating due to uncertainties including the CEO's resignation and ongoing investigations by regulatory authorities. Similarly, Lake Street Capital Markets lowered its price target to $23 from $32, despite the company's consistent performance in meeting or exceeding earnings estimates.
InvestingPro Insights
As Xponential Fitness Inc (NYSE:XPOF) capitalizes on its new CEO's extensive franchising experience, the company's financial metrics and market performance provide additional context for investors. According to InvestingPro data, XPOF currently has a market cap of $723 million and an attractive price-to-earnings (P/E) ratio of 6.61, which further adjusts to 11.02 when looking at the last twelve months as of Q1 2024. This low earnings multiple suggests that the stock may be undervalued relative to its earnings capacity.
InvestingPro Tips highlight that management's aggressive share buybacks and impressive gross profit margins, which stood at 69.61% for the last twelve months as of Q1 2024, could be indicative of the company's confidence in its growth trajectory and operational efficiency. Furthermore, despite the price having fallen over the last year, there has been a strong return over the last month of 28.07%, signaling potential investor optimism.
It's worth noting that analysts have revised their earnings expectations downwards for the upcoming period. Nevertheless, the company's solid profitability over the last twelve months and predictions of profitability for this year remain key points of interest. With these insights in mind, investors may find additional value in exploring the 10 additional InvestingPro Tips available for XPOF at https://www.investing.com/pro/XPOF. For those considering a deeper dive, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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