Shares of Xponential Fitness Inc. bounced sharply Wednesday, after the franchiser of boutique fitness brands, including CycleBar, StretchLab and Club Pilates, denounced a bearish investor’s report that led to a record selloff in the previous session.
And analyst Randal Konik at Jefferies did the same, recommending investors buy the stock XPOF, +2.16% on the dip as the short seller’s report “seems like a stretch.” Read more about how short selling works.
The stock surged 14.6% in midday trading, on volume that was more than four times the full-day average.
On Tuesday, the stock had plummeted 37.4%, to smash the previous record one-day drop of 13.6% on May 13, 2022, after short seller Fuzzy Panda Research said Xponential’s found and chief executive officer, Anthony Geisler, has a history of misleading investors and business partners.
“Together, the board of directors and management of Xponential denounce the misleading report, which contains inaccurate information, and caution investors not to rely on it,” the company said in a statement. “The board and management stand firmly behind the strength of the business and health of its franchisees.”
Jefferies’ Konik reiterated the buy rating on the stock and his $45 stock price target, which implies nearly 150% upside from current levels.
In a note titled “Short Report Seems Like a Stretch, We Are Buyers Here,” Konik said he was confident in the company’s ability to generate “healthy” results.
“Following our conversation with [management] alongside the company’s press release, we are comfortable that this report is nothing more than speculation and that [Xponential] should continue to execute upon its [long-term] growth initiatives,” Konik wrote.
The stock, which closed the previous session at a 10-month low, has shed 20.8% year to date, while the S&P 500 index SPX, +0.20% has gained 14.1%.
