WeWork Inc. WE is approaching the end of a multi-year cost rationalization and real estate footprint optimization strategy, which has already lowered costs of $2.7 billion from the business, according to Cantor Fitzgerald.
The Analyst: Brett Knoblauch initiated coverage of WeWork with an Overweight rating and a price target of $8.
The Thesis: The market seems to be underappreciating the company’s future cash generation capabilities, which could lend significant upside, Knoblauch said in the initiation note.
"Demand for flexible workspace has remained robust post-pandemic, and we believe the shift away from traditional office lease strategies by enterprises will act as a decade-long tailwind," the analyst wrote. "WeWork will be able to extend debt maturities such that it can ladder debt repayments beginning in 2025E, whereby we estimate it will be generating more than $500m in FCF."
WE Price Action: Shares of WeWork had risen by 7.66% to $2.25 in premarket trading on Monday.
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