European Wax Center: Strong Financial Performance and Strategic Growth Initiatives Justify Buy Rating

Lorraine Hutchinson, an analyst from Bank of America Securities, reiterated the Buy rating on European Wax Center (EWCZ – Research Report). The associated price target is $6.00.

Lorraine Hutchinson’s rating is based on the European Wax Center’s strong financial performance and strategic initiatives. The company’s profitable business model and robust free cash flow suggest that its current valuation is undervalued, warranting a higher multiple than the existing 7x EV/EBITDA. The management’s positive outlook for the fiscal year, coupled with stable sales from Wax Pass and routine guests, supports this perspective. Additionally, the company has shown improvement in new guest acquisition trends and has maintained its guidance despite macroeconomic uncertainties.
Furthermore, the European Wax Center has demonstrated signs of recovery in non-core guest traffic, with system-wide sales increasing by 2% in the first quarter. The company is also focusing on strategic marketing initiatives to enhance customer engagement and acquisition, which could drive future growth. Management’s confidence in mitigating tariff impacts and its rigorous approach to managing underperforming centers further bolster the company’s growth prospects. These factors collectively underpin Lorraine Hutchinson’s Buy rating for the stock.