Analysts at Roth Capital Partners said Wednesday that YogaWorks Inc’s (NASDAQ:YOGA) accelerating membership growth exceeded their expectations with membership sales growing 14% on a same-store sales basis in the first quarter, compared to the same period a year ago.
For the quarter ended March 2019, YogaWorks reported a loss of $0.20 per share on revenue of $15.7 million. The consensus estimate was a loss of $0.23 per share on revenue of $15.6 million. Revenue grew 1% on a year-over-year basis.
“Revenue increased 1% year-over-year to $15.7 million and exceeded our $15.3 million estimate and consensus of $15.6 million due to a $1.7 million increase in membership revenue, offset by $1.3 million decline in class packages and one studio closure,” wrote Roth Capital Partners analysts Dave King and Andrew Mali.
YogaWorks heightened focus on memberships has been paying dividends with membership sales growing 11% sequentially and 14% versus the first quarter of last year, on a same-store sales basis.
The analysts maintained their $1.50 target on the stock and Buy recommendation.
Shares in YogaWorks soared nearly 30.6% to $0.99 in afternoon trade.
“Shares are likely to continue trading at a depressed valuation as YOGA explores a capital raise, but YOGA should eventually benefit from continued growth in yoga participation,” wrote the analysts.
“Longer-term, it also has a significant opportunity to consolidate a highly fragmented studio market,” they added.
Management reiterated guidance for revenue of $60 million to $62million.
"This reflects an ongoing turnaround in the base business, fewer class pack promotions and eventually higher margins, and continued growth in membership sales," wrote the analysts.
YogaWorks has more than 68 yoga studios in nine US markets including Los Angeles, Orange County, Northern California, New York City, Boston, Baltimore, the Washington DC area, Houston and Atlanta.
It strives to make yoga accessible to everyone by offering a wide range of class styles for people of all ages and abilities. Through its studios, the company offers yoga classes, integrated fitness classes, workshops, teacher training programs and yoga-related merchandise.
Contact Uttara Choudhury at [email protected]