Xponential Fitness' Strong Q4 Results & Growth Opportunities Trigger 7% Price Target Boost By This Analyst

Raymond James analyst Joseph Altobello reiterated a Strong Buy rating on the shares of Xponential Fitness Inc XPOF and raised the price target from $30 to $32.
Xponential Fitness reported strong Q4 results Thursday afternoon that exceeded the analyst’s initial expectations, driven once again by robust studio and member growth.
For the quarter, adjusted EBITDA of $22.2 million grew 158% y/y, while revenues of $71.3 million increased 44% y/y.
The analyst said that franchise revenue grew 40% to $32.2 million and Equipment sales increased 64% to $11.5 million, driven by studio openings and increased foot traffic.
During the quarter, XPOF opened 156 net new studios, bringing the full year total to a record 511 and total current studios worldwide to more than 2,600.
At the same time, XPOF sold 257 licenses in the quarter for a total of 5,450 and implying a 4 - 5 year pipeline, the analyst said.
Management also provided initial 2023 guidance, which comes across as encouraging, said the analyst.
The increase in price target, the analyst said, implies a valuation roughly in line with Planet Fitness Inc PLNT, despite XPOF’s diverse brand portfolio and ample long-term growth and margin expansion opportunities, as well as a high level of visibility given its studio pipeline.
The analyst sees meaningful growth opportunities driven by several factors, including rapid footprint expansion, a recovery in studio productivity from the COVID-related lows, and higher margins largely through operating leverage.
Price Action: XPOF shares are trading higher by 16.08% to $29.31 on the last check Friday.
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