XpresSpa (XSPA) made an unlikely move during the pandemic and turned its shuttered airport wellness business into Covid-19 testing facilities. Looking at the company’s 1Q21 results, H.C. Wainwright’s Scott Buck thinks the move has paid off.
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The company delivered revenue of $8.5 million, way above Buck’s forecast for revenue of $2.4 million.
“The beat to our estimate reflects better than expected revenue contribution from XpresCheck, which totaled $8.2M, though included $3.2M in revenue that was unable to be recognized in prior quarters.”
The result of which was also a big mark up for store margin, which came in at 51.1%, far above Buck’s 14.5% estimate, and also much higher than the pre-pandemic store margins of 21% and 22% in 2018 and 2019, respectively.
What this proves to Buck is that the company’s XpresCheck initiative – the Covid-19 testing facilities – is providing “proof of concept to investors who have been less than patient in awaiting results.”
There’s other good news. The company saw out the quarter operating 13 XpresCheck locations in 11 airports, six of which opened during the quarter, which implies to Buck that the full revenue contribution from all 13 locations is still to come.
Furthermore, at last, the company revealed its new travel, health, and wellness brand, Treat.
By the end of June, the company will start to roll out the latest concept, which will include some medical services as well as retail and travel products and services, in three phases. While there will initially be only two physical locations, Buck believes these “could potentially find homes” in as many as 30 U.S. airports. The physical stores will go alongside a meaningful digital footprint, which could provide a big opportunity for future growth.
As such, Buck recommends investors “accumulate a position in XSPA shares ahead of what we anticipate to be a meaningful improvement in operating results.”
All in all, Buck reiterated a Buy rating on XSPA stock along with a $3.5 price target. The implication for investors? Upside of 167%. (To watch Buck’s track record, click here)
Some companies fly under Wall Street’s radar and XpresSpa currently appears to be one such name. Buck says the quarter’s results are “likely to open some eyes,” but the 5-star analyst’s review is currently the only one on record. (See XSPA stock analysis 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.
