Exane BNP Paribas Upgrades Planet Fitness (PLNT) to Outperform

Exane BNP Paribas analyst Laurent Vasilescu upgraded Planet Fitness (NYSE: PLNT) from Neutral to Outperform with a price target of $97.00.

The analyst said: "We were impressed with new CEO Colleen Keating’s strategic approach on the 2Q24 call. Feedback from checks and investors is also positive (fig 1). We think the narrative on Planet is shifting back to the company’s long-term growth potential. We think line-of-sight to store openings reaccelerating into 2025/2026 could be enough to support the stock as the market is patient with a turnaround. In A New Path Forward with Pricing, we showed how raising the Classic Card price to $15 could boost new unit returns Year 2 EBITDA 25% (fig 2). Now Planet is testing raising Black Card pricing 12-20%. This could push cash-on-cash returns above 2019 levels (fig 3, 4). Other changes to the business can help: 1) new CMO to focus on marketing to Gen Z (~27% of members), 2) improving the member experience, 3) pushing out remodel/re-equip cycle, and 4) potential to implement things like abatements in Year 1. On top of this, expected falling rates (see The Weight of Rates) further boost returns (fig 4). We think better unit economics and lower rates should spur store openings. Based on penetration analysis, we see a path to 4,000+ units (fig 10). Consider that Planet’s penetration of the US is ~6% vs top markets at 9% in 2019 and 11% in 2023. Closing this gap is possible, especially if returns are improving. We model new openings of ~195 in 2024/~220 in 2026 or ~16% and 20% above cons. If growth reaccelerates, valuation screens attractive. We establish a $97 TP based on 18.5x EV/EBITDA multiple and upgrade to Outperform."

For an analyst ratings summary and ratings history on Planet Fitness click here. For more ratings news on Planet Fitness click here.

Shares of Planet Fitness closed at $78.98 yesterday.

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