Analyst Upgrades Reinforce Bullish Thesis for WeWork

WE stock - Analyst Upgrades Reinforce Bullish Thesis for WeWork

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The year has not been kind to WeWork (NYSE:WE) stock thus far. It has lost 21% in value year-to-date. However, the worst might be behind the coworking company. That is what many analysts now believe. Mizuho (NYSE:MFG) analyst Vikram Malhotra recently gave the flexible workplace a thumbs up. The analyst mentioned its potential to take a larger portion of the total market share of the flex office market. Analysts expect the company’s revenue to grow drastically in the coming years due to its initiatives. According to Malhotra, WeWork’s revenue will reach $4.4 billion in 2023. The analyst gave a price target of $9, which compares very favorably with today’s opening price of $6.63.

In recent news, the in depth research of Piper Sandler analyst Alexander Goldfarb has shown that investors should take advantage of WE stock before it’s too late. Goldfarb initiated coverage with an Overweight rating. The analyst said WeWork will be profitable by late 2023 or early 2024, which could accelerate given a flexible workstation business platform. The company’s work utilization rates are better than Covid-19 lows and office utilization is even higher. This demonstrates the allure of its model. Goldfarb’s price target for the stock is $10, a slight notch above Malhotra’s. New analyst upgrades for WE stock have helped it recover from filing to sell up to 760 million shares of class A common stock.

WE Stock Looks Good at These Rates

The issue with WeWork has always been its valuation. It has the perfect ingredients for a sky-high valuation and impressive growth. However, investors are split on how it will perform in the long-term. Users are afraid of how it will turn out — as shown by its lack of profits. But after the necessary bubble bursting, valuations are reasonable for WE stock. More importantly, the pandemic caused the shift to more flexible working models. This means that more people will work from home and telecommute. This environment has helped investors take a revised look at the company. In addition, WeWork is expected to become profitable this year. The company expects its total revenue to surge by 30% next year.

Companies across the globe are embracing a hybrid work model that balances employees’ work and life with flexible office locations. WeWork is one company that has been able to profit from this trend with its platform of shared offices, which it says is growing in popularity.

WeWork forecasts $3.35 billion to $3.5 billion in revenue for the full year, increasing around 30% to 36%. The company is forecasting to make up to $900 million to $1 billion in revenue in the third quarter and fourth quarter, which is the range it expects to become profitable on an adjusted EBITDA basis.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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