Jefferies: OneSpaWorld Is At The Center Of 3 Growth Trends

OneSpaWorld Holdings Ltd (NASDAQ: OSW) is poised to benefit from the rising demand for experience-led travel, leisure travel and health, according to Jefferies.

The Analyst

Stephanie Wissink initiated coverage of OneSpaWorld Holdings with a Buy rating and $17 price target.

The Thesis

Consumers are focusing more on "experiences," and the demand for such travel is growing in the mid-to-high single digit range, Wissink said in the Monday initiation note. (See her track record here.) 

This trend is being led by millennials and is boosting the demand for leisure travel, the analyst said. And it coincides with a rapid increase in spending on personal health services, she said. 

OneSpaWorld is well-positioned to record rising volumes, given that it is a market leader in spa center outsourcing for major cruise lines, Wissink said. The company has 163 spa, salon and wellness centers aboard major cruise ships and 69 centers in destination resorts worldwide, she said. 

Around 75-80 percent of the company’s annual sales are estimated to be contributed by new centers, the increased utilization of existing centers and share gains in the travel market, the analyst said. 

The remaining growth is expected to come from service menu enhancements at higher prices, which will also boost the margin mix, she said. 

Price Action

OneSpaWorld shares were trading up by 0.22 percent at $13.55 at the time of publication Monday. 

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