On Monday, Guggenheim maintained a Buy rating on Xponential Fitness Inc (NYSE: XPOF) and raised the stock price target from $18.00 to $20.00. The adjustment follows the appointment of a new CEO, which has been perceived as a significant positive change for the company. Xponential Fitness saw its shares surge by approximately 25% today, a notable performance compared to the modest 0.55% increase in the S&P 500.
The recent hiring of Mark King as CEO, succeeding Anthony Geisler, has been met with market approval. King's extensive consumer industry experience is expected to benefit the company as it moves forward. Guggenheim highlights that King’s immediate priorities will involve mentoring the management team, strengthening franchisee relationships, rebuilding investor credibility, and refining the company's operational strategies.
Xponential Fitness's operational performance has been strong, with positive momentum in both top and bottom lines. The transition of studio lease exits is progressing well, which is also contributing to the company's positive outlook. The new CEO's four-decade experience in the consumer sector is anticipated to be an asset in these initiatives.
Guggenheim's revised price target suggests a conservative 9.2 times the estimated EBITDA for the year 2025 for Xponential Fitness. This valuation reflects the firm's confidence in the company's potential for growth and value creation under the new leadership. The firm stands by its current estimates but has increased the price target to reflect the improved sentiment and the expected positive impact on shareholder value.
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.
Evercore ISI maintained an Outperform rating on Xponential Fitness, highlighting the robust background of the new CEO, who brings experience from significant franchising sectors. Still, 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.
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. Lake Street Capital Markets also lowered its price target to $23 from $32, despite the company's consistent performance in meeting or exceeding earnings estimates.
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.
InvestingPro Insights
In light of Guggenheim's optimistic outlook on Xponential Fitness Inc (NYSE: XPOF), recent data from InvestingPro underscores some key financial metrics that may further inform investors' perspectives. With a market capitalization of $734.06 million and a trailing twelve months revenue growth of 23.45%, XPOF demonstrates a robust financial position.
The company's impressive gross profit margin, which stands at 69.61% for the last twelve months as of Q1 2024, aligns with the operational strengths highlighted by Guggenheim. Moreover, XPOF boasts an adjusted P/E ratio of 11.02, suggesting that the stock may be trading at a reasonable earnings multiple given its growth prospects.
InvestingPro Tips for XPOF reveal that management has been actively engaged in share buybacks, signaling confidence in the company's value. Moreover, analysts predict that the company will be profitable this year, a sentiment that is reflected in the 28.07% price total return over the last month. For investors looking to delve deeper into XPOF's potential, there are additional InvestingPro Tips available, providing a comprehensive analysis of the company's performance and outlook. By using the coupon code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these insights.
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