On Friday, Roth/MKM maintained a Buy rating on Soho House & Co Inc. (NYSE: SHCO) but reduced its price target to $7.50 from the previous $10.00. The firm's stance remains positive on the company following its fourth quarter results, which displayed significant margin improvements. Despite the optimism, the lowered price target reflects a cautious approach due to certain operational challenges faced by the company.
The company's recent financial disclosures have shown progress in terms of margin growth. This development is a positive indicator of the company's ability to manage costs and improve profitability. However, the firm noted that Soho House has set lower targets for opening new locations and has experienced inconsistent in-house spending patterns.
The impact of these trends is expected to influence the company's free cash flow (FCF) development. The firm anticipates that while Soho House is on a positive trajectory, it will require more time for the company's FCF to increase significantly. This tempered expectation has led to the adjustment of the price target.
The revised price target of $7.50 takes into account the current business conditions and the anticipated pace of financial improvement. Despite the reduced target, the firm's reiteration of the Buy rating suggests confidence in the long-term prospects of Soho House.
The report concludes with a reaffirmation of the Buy rating, indicating that the firm believes in the company's potential for growth despite the near-term challenges. The new price target of $7.50 represents the firm's adjusted expectations for Soho House's stock performance.
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