Strategic Acquisition and Long-Term Growth Potential Justify Buy Rating for Basic Fit N.V.

Analyst James Wheatcroft of Jefferies maintained a Buy rating on Basic Fit N.V., retaining the price target of €28.00.

James Wheatcroft has given his Buy rating due to a combination of factors that suggest potential growth for Basic Fit N.V. despite some investor concerns. The acquisition of Clever Fit, although initially seen as a deviation from Basic Fit’s traditional franchising strategy, presents an opportunity for expansion into new markets and could enhance the company’s geographic footprint. This strategic move, while introducing a dual brand strategy, is expected to close by the end of the year without regulatory hurdles, which could streamline the integration process.
Despite the higher leverage anticipated in the short term and the termination of the share buyback program, Wheatcroft sees value in the long-term prospects of the acquisition. The deal, valued at up to €175 million, implies a significant EV/EBITDA multiple, but it could potentially lead to increased EBITDA growth over time. Wheatcroft acknowledges the complexities involved but believes that the strategic benefits and potential for increased market presence justify the Buy rating.

In another report released on October 17, Kepler Capital also maintained a Buy rating on the stock with a €41.00 price target.