OneSpaWorld's Revenue Growth Disconnected From Stock Performance: A Golden Opportunity For Investors, Suggests Analyst

Loop Capital analyst Laura Champine upgraded shares of OneSpaWorld Holdings Limited OSW to a Buy from Hold, with a price target of $13.

The primary driver of OneSpaWorld's revenue growth is the average weekly revenue per ship, which is expected to grow by +20% in the second quarter, says the analyst. This growth moderates to 11% for the entire year.

OneSpaWorld boasts contracts that give the company exclusive rights to serve as the sole health and wellness services provider for nearly all major U.S. cruise lines, the analyst adds.

Also Read: Spa At Sea? OneSpaWorld Inks Exclusive Deal With Norwegian Cruise Line

The analyst notes that the share price of OneSpaWorld has pulled back after the partial divestment of the company's former private equity owner.

The analyst adds that cruise line operators have cited continued outsized growth in recent investor meetings. 

Champine thinks that "the disconnect between fundamentals and stock performance" has created a solid entry point for investors. 

The analyst expects cruise companies to continue to use new data analysis tools to encourage customers to pre-plan incremental services, and this trend should benefit OSW.

The analyst believes OneSpaWorld is primed for growth as consumers spend more on services over products. 

The analyst projects 2023 services revenue to grow 33% Y/Y and 2022-2027 CAGR of 12%. 

Price Action: OSW shares are trading higher by 3.11% to $11.62 on the last check Wednesday.