Market Overview

Imperial Capital: MINDBODY Has The Keys To Success

Imperial Capital: MINDBODY Has The Keys To Success

MINDBODY Inc (NASDAQ: MB), a provider of cloud-based business management software for the wellness services industry, reported quarterly results Thursday that showed the company reversing a loss one year ago to a profit on a non-GAAP basis.

The Analyst

Imperial Capital analyst George Kelly maintained an Outperform on shares of MINDBODY and raised the price target from $35 to $42, suggesting about 18-percent upside from current levels.

The analyst attributed the raised price target to the company's platform value and potential for higher estimates from transaction products and international payments integration.

The Analyst

Mindbody's platform monetization improvement is becoming more visible and the company has the pieces in place to be successful, Kelly said in a Friday note. 

The fourth-quarter results were ahead of Imperial Capital's estimates, with outperformance driven by the payments business, Kelly said. Even as volume per subscriber exceeded estimates, net subscribers again missed expectations amid the company's efforts to filter through its lower-tier subscribers, the analyst said. 

Mindbody's 2018 revenue guidance is above both consensus and Imperial Capital estimates, Kelly said. 

"Incremental profitability will be re-invested in product development, muting EBITDA growth versus [the] previous estimate," the analyst said. 

Imperial raised its 2018 and 2019 revenue estimates to reflect higher average revenue per user. 

This year appears to be an important one for Mindbody's product development, with dynamic pricing prominently displayed across consumer platforms, Kelly said. Additionally, Mindbody expects full international payments integration by the end of the year, he said. 

The Price Action

Mindbody shares are up about 38 percent over the past year.

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Latest Ratings for MB

Jan 2019DowngradesOutperformMarket Perform
Jan 2019DowngradesBuyHold
Jan 2019DowngradesOverweightSector Weight

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