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Xponential Fitness (NYSE:XPOF) was teed up on Thursday by Roth Capital as a top idea in the consumer sector.
Analyst George Kelly said the company has done well since its July 2021 IPO and the firm believes its franchise operational and financial models are only strengthening.
“XPOF’s capital structure is in need of a revamp, which we believe could come in 2023, and give it more b/s flexibility and cash flow to accelerate growth and/or return capital to shareholders, none of which is modeled.”
Kelly and team also pointed to several XPOF initiatives in place that could increase the franchise take rate longer-term. Those included XPASS, a centralized membership that gives consumers access to all of XPOF’s brands, as well as increased royalty rates and other franchise fees.
On the valuation front, Buy-rated Xponential Fitness (XPOF) current forward EV/EBITDA multiple is noted to be significantly below high-growth consumer retail/franchise peers. The stock is called compelling given the growth/margin profile, cash generative financial model, and low net leverage.
Roth Capital assigned a price target of $30 to XPOF to rep more than 50% upside. The average analyst price target on XPOF is $27.89.
The Seeking Alpha Quant Rating on XPOF is flashing Strong Buy.

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