Shares of Xponential Fitness could surge roughly 30% as the boutique fitness firm emerges as an industry leader, according to Citi. Analyst James Hardiman initiated coverage of Xponential Fitness with a buy rating, saying the franchisor behind the Club Pilates, YogaSix, Pure Barre classes and more is quickly expanding its business and can be resilient in a downturn. "XPOF has carved out a defensible and profitable position as the industry leader in the boutique fitness space. The company's asset-light franchise model allows for quick scaling of the business, with recurring revenues buffering the downside in the event of a recession," Hardiman wrote. Xponential Fitness's growth trajectory is "showing no signs of macro headwinds," according to the analyst. While the pandemic hit the broader industry, Xponential added more than 1,000 studios to its base and posted positive earnings per share for the first time in the third quarter, according to the note. "While XPOF is far from recession proof, this trajectory aided by residual post-pandemic tailwinds and an affluent ($130K+ income) customer positions the company better than most headed into '23," read the note. The company is also reporting twice as many studio licenses sold as open studios, and management projects more than 500 new studio openings each year, according to the note. The analyst expects this estimate is "easily achievable/beatable." "The story is a near-term momentum play in a consumer discretionary sector short on momentum, while the long-term opportunity for secular tailwinds and share gains are key aspects to the investment case," Hardiman added. All this means shares of Xponential Fitness have handily outpaced the market this year. The fitness boutique stock is up 10% this year, while the S & P 500 is down roughly 17%. Still, the analyst's $29 price target means shares could surge nearly 30% from Monday's closing price. The stock is up slightly in Tuesday trading. —CNBC's Michael Bloom contributed to this report.