Multiple Upside Catalysts Lay Ahead For Mindbody In 2017

Pacific Crest see a number of catalysts lying ahead for Mindbody Inc MB that would enable it to maintain high growth apart from enhancing margin profile. Analyst Trevor Upton maintained his Overweight rating while lifting the target price from $20 to $22 on shares.

The comments come ahead of the BOLD user conference next month as the company is expected to disclose fresh alliances and unveil products. Its earnings topped Street estimates between 15 percent and 29.4 percent in the last four quarters.

The brokerage listed five factors in favor supporting revenue upside for next year:

• Growing subscription fees on average basis
• A fresh alliance with Under Armour
• In-app purchases through 3.5 million registered users
• Growing volume of payment
• HealCode widgets providing additional subscription fees

"Health and fitness SaaS leader has multiple upside levers next year. Street estimates for 2017 show revenue growth decelerating to 28% from 36%. While MINDBODY has refocused its efforts on higher-value subscribers with net new customer additions moderating, we foresee a bigger opportunity for increasing subscription revenue per user that should contribute more to growth next year," the analyst said in a note.

The brokerage sees multiple expansions driven by improving margins pointing out that the impressive rate of margin improvement and at the same time maintaining 30+ percent revenue growth.