Friday - Life Time Group Holdings Inc (NYSE:LTH) has been initiated with a Buy rating by Craig-Hallum, accompanied by a price target set at $30.00. The firm highlighted the stock's valuation at less than 10 times its 2024 earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), which is notably lower than its peers.
Comparable companies in the gym sector, such as Planet Fitness (NYSE:PLNT), are trading at approximately 17 times EV/EBITDA, while those in the resort and wellness sectors, like Vail Resorts (NYSE:MTN) and The Joint Corp (NASDAQ:JYNT)., have multiples around 11 and 19 times, respectively.
The analyst pointed out that Life Time Group's current market position offers a substantial growth trajectory, bolstered by significant barriers to entry in its industry. The company's potential for earnings growth and multiple expansions were cited as key reasons for the stock's undervaluation, suggesting that the market has not fully recognized Life Time Group's prospects.
The price target of $30.00 is based on a 12 times multiple of the company's projected 2025 EV/EBITDA, which the analyst believes is conservative when compared to the valuation multiples of its industry counterparts. This target suggests a potential upside from the company's current trading level.
Life Time Group Holdings, operating in the competitive sectors of gyms, resorts, and wellness, is seen by Craig-Hallum as having a variety of opportunities to expand its business. The firm's optimistic outlook is grounded in the belief that the company's current trading value does not reflect its true worth in the marketplace.
The endorsement from Craig-Hallum comes as a positive note for Life Time Group Holdings, indicating confidence in the company's ability to grow and achieve a higher market valuation. This new coverage could potentially influence investor sentiment and the future performance of Life Time Group's stock in the financial markets.
In other recent news, Life Time Group Holdings, Inc. has seen significant developments on various fronts. The company has secured $90 million from a recent sale-leaseback transaction, part of its broader strategy to improve its balance sheet. This brings the total gross proceeds from sale-leasebacks to $130 million for the year, with further negotiations expected to yield an additional $40-$65 million.
The company has also reported a robust financial performance for the first quarter of 2024, with total revenue increasing by 16.8% to $596.7 million. Despite a slight decrease in net income, Life Time raised its full-year revenue and adjusted EBITDA guidance, signaling confidence in growth prospects.
On the strategic front, Life Time has partnered with athletic apparel company lululemon (NASDAQ:LULU) to become the official apparel provider for its tennis and pickleball operations. This collaboration aims to enhance the experience for racquet sports enthusiasts across Life Time's numerous clubs.
From an analyst perspective, Life Time Group's stock has received endorsements from both RBC Capital and Mizuho. RBC Capital maintained its Outperform rating based on the company's detailed growth strategy and long-term financial goals. Meanwhile, Mizuho raised its price target on the company's shares, following a robust first quarter that surpassed expectations in both revenue and EBITDA.
InvestingPro Insights
Life Time Group Holdings Inc (NYSE:LTH) has recently caught the attention of analysts, and with a "Buy" rating from Craig-Hallum, investors are taking a closer look at the company's financial health and growth prospects. The latest data from InvestingPro shows a market capitalization of $4.11 billion and a high P/E ratio of 56.98, which reflects investor optimism about future earnings. Adjusted for the last twelve months as of Q1 2024, the P/E ratio stands at a lower 41.11, and the company has experienced an impressive revenue growth of 18.61%.
InvestingPro Tips indicate that while Life Time Group operates with a significant debt burden, analysts predict the company will be profitable this year, with profitability already demonstrated over the last twelve months. Moreover, the stock's recent performance has been strong, with a 47.54% return over the last three months. However, it's worth noting that the stock is trading near its 52-week high and is in overbought territory according to the RSI, which could suggest caution among potential investors.
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