It’s time to snap up shares of WeWork, according to analysts at BTIG. The firm on Thursday initiated coverage of the workspace real estate company with a buy rating and a price target of $7.50. That implies an upside of more than 192% from where shares currently trade. WeWork is poised to be a winner in the coming years as companies grapple with uncertainty over remote, hybrid or in-person work, which makes it difficult to set a long-term corporate real estate strategy. “We are incrementally more convicted that this uncertainty could persist for years, not quarters, and that employers will continue to prioritize flexibility as they seek to determine when, where, and how their employees will utilize office space going forward,” wrote Thomas Catherwood in a note. “We expect this need for flexible solutions to drive a ‘Supercycle’ of demand for flexible workspaces over the near- and medium-term, a trend that should directly benefit WeWork.” In fact, the longer that companies push off making long-term decisions, the more that WeWork will benefit. That could drive occupancy above the peak of 83% reached in the second quarter of 2019. WeWork set for profitability WeWork has plunged more than 70% since it went public in 2021 via a special purpose acquisition company, or SPAC. The slide in shares is due in part to fears that the company would need to issue equity before reaching profitability and that it might not be able to refinance its maturing debt. “On the contrary, we expect WeWork to achieve positive adjusted EBITDA operations in 1Q23 and positive Cash Flow from Operations in 4Q23,” said Catherwood, adding that this is all without the need to raise incremental capital – a key point in their bullish stance. In addition, he expects that improved cash flow will allow WeWork to repay near-term maturities and refinance larger tranches of debt that mature in mid-2025. “Over time, we expect WeWork to transition to a more mature balance sheet, which could support future growth of the company’s operating platform,” he said. What’s next There are a few upcoming catalysts to watch, according to the note, including the company’s earnings report, the potential for positive operating metrics in 2023, the refinancing or repayment of some of the company’s debt and the onboarding of 50,000 new desks in the coming quarters. In the firm’s upside scenario, WeWork’s brand recognition allows the company to be the primary beneficiary of flexible workspace demand, leading to solid domestic and international growth and profitability. On the downside, WeWork could be hit by a harder and longer global recession, which could reduce demand for flexible workspace. It could also see competitors take up market share, pushing out its profitability goals. — CNBC’s Michael Bloom contributed to this report.
