Morgan Stanley Assumes Xponential Fitness Inc (XPOF) at Overweight, 'Long-term growth should drive positive estimate revisions'

Morgan Stanley analyst Megan Alexander assumes coverage on Xponential Fitness Inc (NYSE: XPOF) with a Overweight rating and a price target of $27.00.

The analyst comments "We see room for ongoing positive EPS revisions and view valuation as attractive relative to its long-term growth, including double-digit unit growth and 20%+ EBITDA growth. The company's solid track record of license sales and robust pipeline of unopened studios supports a multiyear runway for DD unit growth. We see several visible drivers of margin upside over the next several quarters with line of sight to 40%+ EBITDA margins by the end of 2024 including tailwinds from re-franchising transition studios, a mix toward international openings which have favorable MFA economics, and scale benefits from unit growth given the asset light franchise model. Our recent meetings with management increase our conviction that its 2026 targets are conservative, particularly as it relates to international growth and future M&A. Valuation is compelling at 9x our 2024 adj EBITDA today, well below peers in the 13-20x range. We believe continued execution is key to a stock re-rating while we are monitoring terminations and new license sales. Our PT of $27 is conservatively based on 13x our 2024e EBITDA, above current levels but below peers."

For an analyst ratings summary and ratings history on Xponential Fitness Inc click here. For more ratings news on Xponential Fitness Inc click here.

Shares of Xponential Fitness Inc closed at $15.44 yesterday.

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