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Piper Jaffray Raises Price Target on Town Sports Int'l (CLUB) to $4; Remains Sidelined

May 4, 2016 9:03 AM EDT
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Price: $0.20 --0%

Rating Summary:
    2 Buy, 3 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Piper Jaffray reiterated a Neutral rating on Town Sports (NASDAQ: CLUB), and raised the price target to $4.00 (from $2.00), following the company's 1Q report. Town Sports added 12,000 net members in Q1, an improvement from 9,000 in Q4. However, on a revenue basis, revenue from membership dues decreased 9.7% y/y. While the outlook for the business is still quite uncertain, Piper has upped the price target due to an improved balance sheet and cost cutting efforts.

Analyst Sean Naughton commented, "This evening Town Sports reported better-than-expected top-line results with revenue of $101.3M (a decrease of 9.0% y/y) coming in ahead of our estimate of $94.3M. Additionally, Town Sports has made solid progress on reducing its cost structure and strengthening the balance sheet as it has bought back approximately $100.9M in debt for $40.7M, or 40% face value. While we are impressed with the cost savings and balance sheet improvement, we remain on the sidelines on the shares given intense competition at the lower end of the fitness club market, which we believe will make it tough for TSI to grow membership profitably on a consistent basis. PT to $4 from $2."

For an analyst ratings summary and ratings history on Town Sports click here. For more ratings news on Town Sports click here.

Shares of Town Sports closed at $3.60 yesterday.



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