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On Friday, Jefferies analyst Randal Konik adjusted the price target on Xponential Fitness Inc (NYSE: XPOF) shares, reducing it to $32 from the previous $36, while retaining a Buy rating on the stock. The revision follows the company’s fourth-quarter earnings report, which Konik believes demonstrates Xponential Fitness’s robust and highly profitable business model. According to InvestingPro data, the company maintains impressive gross profit margins of 66.6%, though the stock has declined nearly 19% over the past year.
The analyst highlighted several positive indicators from the earnings report, including same-store sales (SSS) growing at a mid-single-digit percentage rate, membership increasing by a mid-teens percentage, and average unit volume (AUV) rising at a high-single-digit percentage. These metrics suggest that the company is maintaining a strong performance trajectory. With revenue of $326.7 million in the last twelve months and 9% year-over-year growth, InvestingPro analysis reveals additional insights about the company’s performance, with more than 10 exclusive ProTips available for subscribers.
Despite the market’s concern over lighter EBITDA figures and the 2025 guidance, Konik expressed confidence in the company’s long-term prospects. He noted that the new CEO, King, is implementing the right strategies to establish a solid foundation for future growth. Konik also pointed out that Xponential Fitness’s valuation multiple is nearly half of that of Planet Fitness (NYSE:PLNT), indicating a significant potential for asymmetric risk/reward.
The price target was moderated slightly based on the guidance, but Konik remains optimistic about the stock’s potential. He concluded that the current valuation presents an attractive opportunity for investors and recommended buying on any weakness in the share price.
In other recent news, Xponential Fitness Inc. reported a significant earnings miss for the fourth quarter of 2024, with an actual earnings per share (EPS) of -$0.19, falling short of the forecasted $0.38. However, the company’s revenue slightly exceeded expectations, reaching $83.2 million compared to the anticipated $81.42 million. Despite modest revenue growth of 1% year-over-year, Xponential Fitness faced a net loss of $62.5 million in the same quarter. Looking ahead, the company plans to open 200-220 new studios globally in 2025, with a focus on improving franchisee profitability and targeting an EBITDA margin of 20-25%.
In other developments, Stifel analysts downgraded Xponential Fitness from Buy to Hold, reducing the price target to $12 from $20. This downgrade was due to operational challenges and a financial restatement that raised concerns over the company’s financial reporting accuracy. The analysts highlighted issues such as poor processes and insufficient resources, which have complicated projections for the company’s future financial outlook. Despite efforts by the new CEO to implement necessary changes, Stifel remains cautious about the company’s trajectory. These recent developments suggest that Xponential Fitness is navigating a critical period of restructuring and stabilization.
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