🍎 🍕 Less apples, more pizza 🤔 Have you seen Buffett’s portfolio recently?Explore for Free

Planet Fitness added as Bullish Fresh Pick at Baird

Published 08/26/2024, 08:37 AM
Updated 08/26/2024, 08:39 AM
© Reuters.  Planet Fitness added as Bullish Fresh Pick at Baird
SPSUPX
-
PLNT
-

Baird analysts revealed in a note Monday that they have added Planet Fitness (NYSE:PLNT) as a "Bullish Fresh Pick," signaling optimism about the company's prospects as it heads into 2025.

Despite the stock's significant rise from early 2024 lows, it has lagged behind the broader market year-to-date, gaining just 10% compared to the S&P 1500's 17%.

However, Baird believes that Planet Fitness is well-positioned to thrive in a slowing growth environment, thanks to recent strategic changes and the potential for lower interest rates and reduced building costs.

"We are highlighting PLNT as an attractive idea for a slowing growth environment," they wrote.

According to Baird, new leadership at Planet Fitness has effectively addressed unit economic challenges by implementing pricing adjustments, reducing capital expenditures, and extending re-equipment and remodeling timelines.

These actions are said to have helped restore return on invested capital (ROIC) to near pre-COVID levels. Baird also highlights the new CEO, Colleen Keating, who is focusing on enhancing leadership, improving member experience, and upgrading marketing strategies to drive faster growth.

Looking ahead to 2025, Baird sees multiple fundamental drivers that could boost Planet Fitness’s performance, particularly in marketing. After a disappointing Q1 2024, the company is expected to revamp its marketing approach, leveraging its substantial $300 million annual budget to better communicate its value proposition.

Analysts note that additional drivers include continued pricing adjustments, loyalty programs, new service offerings, and favorable industry tailwinds.

Baird maintains its Outperform rating on Planet Fitness, noting that its strong consumer value proposition, high-margin franchised model, and growing cash return capacity position the stock well for the future.

If these factors, combined with potential lower rates and building costs, lead to accelerated unit growth, the firm believes the stock could reach $100 per share, offering attractive upside potential for investors.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.