Citi cuts European Wax Center to Neutral, sets $5.50 target

On Thursday, Citi adjusted its rating for European Wax Center (NASDAQ:EWCZ), downgrading the stock from Buy to Neutral and establishing a price target of $5.50. The move was made to align Citi's database with a previous assessment that was communicated in a note on August 14, 2024. The note had indicated a change in perspective on the company's long-term growth potential, leading to the revised Neutral stance.

The August analysis by Citi had highlighted uncertainties surrounding European Wax Center's long-term growth opportunities, prompting the downgrade to Neutral at that time. However, this change was not reflected in Citi's system until the recent update.

The correction made by Citi ensures that the firm's rating system accurately represents their current view on European Wax Center. The price target of $5.50 accompanies this updated rating, providing investors with a revised expectation for the stock's potential performance.

The adjustment by Citi comes as a clarification rather than a new analysis, as it refers back to the sentiments expressed in the August note. The firm's actions are aimed at maintaining consistency and transparency in its stock rating practices.

In summary, Citi's revision to a Neutral rating from a Buy rating for European Wax Center, with a price target of $5.50, is a correction to align the firm's internal records with its previously published viewpoint on the company's future growth prospects.

InvestingPro Insights

European Wax Center's recent downgrade by Citi aligns with some of the challenges reflected in the company's financial metrics. According to InvestingPro data, EWCZ has experienced a significant price decline, with a 45.72% drop over the past six months and a 58.77% decrease over the last year. This downward trend supports Citi's more cautious stance on the stock.

Despite these challenges, EWCZ maintains some positive financial attributes. The company boasts impressive gross profit margins of 73.11% for the last twelve months as of Q3 2023, indicating strong pricing power in its service offerings. Additionally, an InvestingPro Tip highlights that EWCZ is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.37, suggesting potential undervaluation.

For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on European Wax Center, providing deeper insights into the company's financial health and market position.

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