Sometimes the market presents investors with untapped opportunities; looking at the prospects of XpresSpa Group (XSPA), H.C. Wainwright’s Scott Buck thinks the airport wellness/Covid-19 testing business is one such example.
“We recommend investors use the current dislocation in share price to accumulate XSPA shares,” said the analyst following the release of a 2021 preliminary revenue readout which came in “well above expectations.” Buck sees “improving financial results and more positive news flow” as reasons investors should get on board.
On Monday, the company said revenue for full year 2021 is expected to come in above $71 million, “meaningfully higher” than Buck’s $64.3 million forecast. The figure also suggests 4Q21’s revenue haul will reach approximately 27 million, also some way above Buck’s $19.9 million forecast.
These are record numbers for XSPA, including pre-COVID-19 levels. A mix of strong demand for COVID-19 testing at XpresCheck locations plus some legacy spas’ recent reopenings were behind the strong display.
With testing demand likely to remain an “important tool in slowing the spread of the virus, and in some cases mandatory for travel to certain international destinations,” 2022 should see the opening of additional XpresCheck locations which should drive “incremental revenue growth.”
Additionally, in December, the company opened its first Treat store – the company’s new travel health and wellness brand. While its impact will be negligible in Q4, the new venture should serve as a “potential catalyst for 2022 and 2023.”
The company also disclosed that it is purchasing digital healthcare and analytics relationship marketing agency Hyperpointe, an addition which Buck thinks can “potentially help expand the company’s current relationship with the CDC, providing additional biosurveillance opportunities in 2022 and beyond.”
Growing demand for testing, combined with more spa reopenings, and a second Treat location expected in the spring, all provide “revenue momentum” into 2022, and push the company further toward its goal of $500 million in sales by 2025.
It’s no surprise to learn, then, Buck has a Buy rating for XSPA stock, and a $4 price target to back it up. This figure conveys his confidence in XSPA’s ability to soar 146% in the next twelve months. (To watch Buck’s track record, click here)
Some names fly under Wall Street’s radar and XSPA appears to be one right now; Buck’s review is currently the sole one on record. (See XSPA stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.