XpresSpa To Benefit From Improving Travel Trends, New Outlet Openings: Analyst

Shares of health and wellness services company XpresSpa Group Inc (NASDAQ: XSPA) were trading solidly higher Tuesday following a positive analyst move. 

The XpresSpa Analyst: H.C. Wainwright analyst Scott Buck initiated coverage of XpresSpa shares with a Buy rating and $3.50 price target.

The XpresSpa Thesis: XpresSpa is pivoting its existing spa business toward a more comprehensive travel health and wellness store model, which includes medical testing and the sale of retail products, Buck said in a Tuesday initiation note. 

The company now provides medical testing, including COVID-19 tests, at airports, the analyst said. 

Related Link: Watch Benzinga CEO's 'Crazy' XpresSpa Stock Pick Play Out In Real-Time: Video

Six to 12 months down the line, when airport traffic normalizes, the merging of the testing and spa services could create a leading airport focused health and wellness provider, he said. 

XpresSpa Group is working with both airports and airlines to facilitate testing to meet the increasing number of travel restrictions, Buck said. 

"As an experienced airport operator, the company is well positioned as it shifts focus towards opening new XpresCheck locations at U.S. airports."

H.C. Wainwright projects the company will have 30 operating locations by the end of 2022. 

XpresSpa has identified 60 airports, and some of those locations may justify multiple sites, Buck said. 

H.C. Wainwright expects the company to end 2022 with 30 operating locations, which compares to the 60 airports identified by the company.

Additionally, the company is positioned to improve its existing real estate footprint as airports attempt to move testing facilities to high traffic areas, the analyst said. 

As spa services come back, improved locations could also potentially drive increased customer traffic, he said. 

"Near term, we expect XSPA shares to respond to more positive news flow on improvements in air travel trends and new location openings which are likely to occur ahead of the improvement in operating results."

XSPA Price Action: At last check, XpresSpa shares were rallying 5.41% to $2.82. 

Related Link: XpresSpa Shares Jump Over 18%, As Company Says It Has Expedited Airport COVID-19 Screening