Xponential Fitness (NYSE:XPOF) experienced a significant surge intra-day today, with shares climbing over 6%, following an upgrade from Stifel. The rating was raised from Hold to Buy.

Stifel analysts commented that the stock’s potential upside now seems more attainable given its current price levels. They pointed out that XPOF’s share price had dropped 33% over the past week, influenced by a negative Bloomberg article and an 8-K filing that revealed the SEC’s request for certain documents from the company.

According to the analysts, the SEC’s inquiry seems to be focused on Xponential Fitness’s non-GAAP Key Performance Indicators (KPIs) reported in its filings. The analysts believe that the market’s reaction to this news was hasty and perhaps overblown.

Stifel assesses that the dip in XPOF’s stock price reflects an overly pessimistic short-term sentiment, rather than deep-seated fundamental issues within the company. The analysts expressed confidence in the risk/reward profile of Xponential Fitness, noting its highly franchised business model.

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