Jefferies Maintains Bullish on Planet Fitness (PLNT) After Survey Shows 'Attractive Opportunity' to Capitalize on New Trends

January 25, 2021 8:17 AM EST
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Price: $85.74 -0.56%

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    11 Buy, 7 Hold, 1 Sell

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Jefferies analyst Randal Konik reiterated his bullish stance on Planet Fitness (NASDAQ: PLNT) as he sees an “attractive opportunity ahead to capitalize” on emerging trends.

The latest survey conducted by Jefferies shows worrisome results when it comes to COVID-19’s impact on consumer health.

“In mid-January, we conducted a survey to better understand how people's health habits have changed over the past year with some alarming results: 56% admitted to having had experienced stress, 51% reported anxiety, 44% gained weight, 40% cited sleep disruption and 37% admitted to depression symptoms. Loneliness, boredom and anger were also commonly cited among respondents. Of the 27% of respondents who adopted healthier habits since the start of the pandemic, more than half cited exercising as a positive change,” Konik said in a note.

As a result, consumers are set to prioritize weight loss and exercise in 2021.

“Almost 70% of respondents hoped to lose weight in 2021, with the majority looking to lose between 6-20lbs. Meanwhile, more than 80% expressed interest in exercising, but just 24% belong to a gym. Around one fifth of the surveyed group showed an interest in joining a gym in 2021, and over 40% of those people are considering PLNT. Despite the boom in digital fitness programs over the past year, just 12% admitted to having a virtual membership, with Planet Fitness and Peloton cited as two of the most preferred platforms.

“Growth in unique visitors to was up ~17% over the past four months. Time spent on the company's website, as well as pages per visit, are nearing pre-COVID levels, illustrating strong interest for the brand. Google search trends for Planet Fitness and related terms remain robust, including "planet fitness near me" — which inflected to near record levels as of late, suggesting that people continue to be interested in attending the gym,” Konik added.

The analyst highlights the apparent shift in consumers’ stance towards fitness and health. On PLNT, he argues that investors are underappreciating PLNT’s digital offering, and therefore, he believes the stock is well-positioned to gain from “these depressed levels”.

“This is a highly attractive business model that sits at the confluence of strong secular trends; a shift in consumers' prioritization of fitness and attraction to value. We see a trade-down effect occurring among gym-goers from boutique and high- end gyms to PLNT, and with its fortified biz model that boasts enviable cash returns and margins, we see PLNT as well-positioned to weather this NT storm,” Konik concludes.

The analyst reiterated a Buy rating and price target of $95 on PLNT.

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 $77.75 yesterday.

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Jefferies & Co, Randal Konik