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Why YogaWorks Shares Could Double From Post-IPO Lows

Jon C. Ogg

Published: September 5, 2017 11:30 am

Last Updated: January 12, 2020 8:30 am

YogaWorks Inc. (NASDAQ: YOGA) is one of the largest and fastest growing providers of high-quality yoga instruction in the United States. Its initial public offering was less than exciting. Now the analysts at the underwriting firms are free to initiate coverage, and they are basically saying that YogaWorks is a steal.

This company claimed about 3 million student visits in 2016 and 50 company-owned studios, and it has an internet-based digital media service. YogaWorks is currently the only national, multidiscipline yoga instruction company, and its brand is present in six geographically dispersed U.S. markets: Los Angeles, Orange County (California), New York City, northern California, Boston and Baltimore/Washington D.C.

It turns out that the post-IPO selling pressure may have been a gift. After selling 7.3 million shares at $5.50 per share, YogaWorks shares had sold off handily since its disappointing August IPO. What made this sell-off more interesting was that YogaWorks’ valuation already had been cut by about one-third going into its formal pricing.

The underwriters for the offering were Cowen, Stephens, Guggenheim Securities, Roth Capital Partners and Imperial Capital. Not all details have been seen in these reports, but what has been seen has so far been rather positive.

It was just in recent days that YogaWorks announced its first acquisition of 2017 with the purchase of Tranquil Space’s two studios in the Washington, D.C., metro area. This was said to grow its studio count to 52 and broadening its regional footprint on the east coast.

YogaWorks was started with an Outperform rating and was assigned a $7 price target at Cowen.

Guggenheim started YogaWorks with a Buy rating and assigned it a $7 target price.

Roth Capital started YogaWorks with a Buy rating and a $7 price target.

Stephens started coverage with an Overweight rating

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YogaWorks was up 15% at $3.80 as of Friday’s close, and its shares were up another 8% at $4.11 on Tuesday morning after its underwriting firms’ analysts were allowed to initiate their ratings coverage. Its post-IPO range has been $3.29 to $5.85.

If the initial analyst reports are correct, those lucky few investors who bought shares last week might see their stock double if they hold their shares into 2018.