Xponential Fitness (NYSE:XPOF) shares are on the rise today after Wall Street put its weight behind the gym franchisor.
Shares of the company had taken a beating yesterday after Fuzzy Panda Research made multiple accusations about the company. These included Anthony Geisler, XOPF’s Founder and CEO having a history of misleading investors and partners, struggles at XPOF franchisees and brands as well as multiple permanent franchisee closures.
Today, XPOF has denounced the “misleading” report while sharing details about the fundamental strength of the company. It noted that average unit volume in the first quarter was at $542,000 and expects a 25% to 30% operating margin and 40% cash on cash return.
Stores may remain permanently closed when the company relocates or transitions underperforming studios to other franchisees in its network but XPOF has in certain cases repurchased or assumed underperforming studios.
Additionally, 74% of the company’s revenue is recurring while its net debt to LTM EBITDA during Q1 stood at 2.9x.
Moreover, today, Evercore ISI analyst Warren Cheng has reiterated a Buy rating on the stock alongside a $45 price target. Raymond James’ Joseph Altobello too has reiterated a Buy with a $40 price target. Cheng noted that some of the business practices highlighted need to be looked at but his view on XPOF’s potential remains intact. Altobello believes the sharp selloff in the stock “was overdone.”
Overall, the Street has a $37 consensus price target on Xponential Fitness alongside a Strong Buy consensus rating. Despite the recent selloff, shares of the company still remain 43.4% higher over the past year. Short interest in the stock though is now hovering at ~18.3%.
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