On Thursday, TD Cowen reaffirmed its positive stance on shares of Planet Fitness (NYSE:PLNT), raising the fitness chain's price target from $110.00 to $120.00 while maintaining a Buy rating. The firm's analyst cited the company's position at the beginning of a multi-year turnaround and identified several catalysts that could drive the company's performance beyond current estimates, potentially leading to an expansion in valuation.
The company, currently valued at $8.4 billion, has shown impressive momentum with a 51.5% price return over the past six months. According to InvestingPro analysis, the stock is currently trading above its Fair Value, with 16 key insights available to subscribers.
Planet Fitness is seen as a top pick for 2025, with TD Cowen's expectations of earnings per share (EPS) for fiscal years 2025 and 2026 being higher than the consensus due to stronger comparable store sales (comps) and improved margins. The analyst's optimism stems from the potential acceleration of new gym openings as the economic model for new locations is projected to revert to levels seen in 2019.
InvestingPro data reveals impressive gross profit margins of 60.3% and projects 16% revenue growth for FY2024. Dive deeper into Planet Fitness's financial health and growth prospects with InvestingPro's comprehensive research report, part of our coverage of 1,400+ US stocks.
The company's recent transition to a new $15 Classic Card membership, along with more effective marketing strategies and optimized floor layouts, are expected to contribute to stronger comps. Moreover, the firm anticipates a significant increase in gym openings by fiscal year 2026, estimating 185 new locations, including 167 franchises, a figure that the analyst believes could be on the conservative side.
The recent remarks from Planet Fitness's new CEO have also been encouraging to the firm. Ms. Keating's development of a robust initiative roadmap is expected to further enhance comps, franchise profitability, and the overall valuation of the company. These developments present a positive outlook for Planet Fitness as it embarks on a path that could lead to financial outperformance and growth in the coming years.
In other recent news, Planet Fitness reported a robust third-quarter performance, exceeding expectations with a 5.3% increase in revenue to $292.2 million. The company also noted a 4.3% increase in same-club sales and a 10% rise in adjusted EBITDA.
Furthermore, DA Davidson, a financial services firm, adjusted its outlook on Planet Fitness, increasing the stock's price target to $87.00 from the previous $70.00, while maintaining a Neutral rating. BMO Capital also maintained an Outperform rating on the company, raising the price target from $87 to $100.
These recent developments follow Planet Fitness's successful initiative to encourage franchisees to purchase additional strength equipment, which is expected to contribute approximately $20 million to the fourth-quarter revenue for 2024. The company also announced plans for expansion, setting a target of 5,000 clubs in the U.S. and exploring international markets.
Despite these positive developments, DA Davidson kept its earnings per share (EPS) estimate steady at $0.60, introducing an EPS estimate for the year 2026 and adjusting the target price-to-earnings (P/E) ratio for Planet Fitness to 26 times, up from the previous multiple of 24 times.
The new price target of $87 is based on this revised 26 times P/E multiple applied to the firm's projected 2026 EPS of $3.35. These are all recent developments in Planet Fitness's growth and strategic initiatives.
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