On Monday, Planet Fitness (NYSE:PLNT) shares received a positive adjustment from analysts at TD Cowen, with the fitness chain's rating being upgraded from Hold to Buy. Accompanying this upgrade, the firm also increased the price target for the company's stock to $92 from the previous target of $66.
The upgrade was spurred by the firm's belief that Planet Fitness represents an early turnaround opportunity with several catalysts that could enhance its valuation. Analysts from TD Cowen anticipate that the company's comparable store sales and earnings per share (EPS) for the fiscal year 2025 will outperform market expectations. This outlook is partly based on the positive impact expected from the recent increase in the price of the company's Classic Card membership.
In addition to the upgraded rating and price target, TD Cowen has named Planet Fitness as its top small to mid-cap (smidcap) investment idea. The analysts cite improved unit economics as a factor that could lead to an uptick in new gym openings in the medium term.
The new Chief Executive Officer of Planet Fitness is also seen as an asset, with a robust roadmap of initiatives that are expected to further support the company's share momentum. The firm's analysts express confidence in the CEO's ability to implement strategies that will contribute to the company's growth and appeal to investors.
Planet Fitness, listed on the New York Stock Exchange under the ticker NYSE:PLNT, is now positioned by TD Cowen as a stock with significant upside potential, as reflected in the substantial increase in the price target and the shift to a Buy rating.
In other recent news, Planet Fitness has made several significant moves. The company has successfully launched a $280 million Accelerated Share Repurchase program and completed an $800 million refinancing transaction. The firm DA Davidson maintains a Neutral rating for the company, with a price target of $62.00. Additionally, Planet Fitness has reaffirmed its 2024 EPS growth forecast, predicting a 7% to 9% increase year over year.
In terms of leadership changes, Planet Fitness has welcomed Colleen Keating as the new CEO. Other firms have updated their ratings for the company, with Jefferies upgrading its stock rating from Hold to Buy, and JPMorgan (NYSE:JPM) shifting from Neutral to Overweight, while Stifel downgraded the stock from Buy to Hold.
For Q1 2024, Planet Fitness reported a 6.2% increase in same-store sales and an 18% rise in adjusted EBITDA. The company has also increased the price for its Classic Card membership.
InvestingPro Insights
Following the upbeat assessment from analysts at TD Cowen, current metrics from InvestingPro fortify the optimistic outlook for Planet Fitness (NYSE:PLNT). With a solid gross profit margin of 62.35% over the last twelve months as of Q1 2024, the company exhibits a strong ability to translate sales into profit. Additionally, the company's impressive revenue growth of 12.86% during the same period indicates a healthy expansion trajectory.
InvestingPro Tips highlight that while Planet Fitness is trading at a high earnings multiple with a P/E ratio of 41.46, the company's liquid assets exceed its short-term obligations, suggesting a robust financial position. Moreover, with a substantial return of 21.42% over the last three months, the company's stock performance reflects vibrant investor confidence. It's worth noting that analysts predict the company will be profitable this year, a sentiment supported by the fact that Planet Fitness has been profitable over the last twelve months. For those seeking further insights, InvestingPro offers additional tips for Planet Fitness investors. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and discover the full range of expert analytics.
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