U.S. stocks edge higher; solid earnings season continues
TD Cowen reiterated its Buy rating and $125.00 price target on Planet Fitness (NYSE:PLNT) Monday, highlighting the fitness chain as its top small and mid-cap investment idea. Currently trading at $104.61, the company has shown strong momentum with a 44% return over the past year, though InvestingPro analysis suggests the stock is slightly overvalued at current levels. The firm cited Planet Fitness’s early-stage multiyear turnaround with upcoming catalysts including second-quarter earnings and a second-half analyst day that could drive estimate revisions.
The research firm expects Planet Fitness to exceed consensus earnings estimates due to stronger comparable sales and margins, noting these projections could prove conservative as business momentum builds. With impressive gross margins of nearly 60% and revenue growth of 10.3% in the last twelve months, the company’s financial performance supports this outlook. TD Cowen views the company as combining both defensive and offensive characteristics while entering what it describes as a "beat and raise cycle." For deeper insights into Planet Fitness’s financial health and growth prospects, InvestingPro offers comprehensive analysis with 12 additional ProTips.
TD Cowen forecasts upside to Wall Street’s fiscal 2025 and 2026 earnings estimates, driven by improved marketing execution, more compelling gym layouts, and less disruption than feared from new "click-to-cancel" membership policies. With a healthy current ratio of 2.1 and moderate debt levels, Planet Fitness appears well-positioned to fund its expansion. The firm also expects economics for new gym locations to approach 2019 levels, potentially accelerating openings in fiscal 2026.
The research firm projects Planet Fitness could return to opening approximately 200 new locations annually by 2027 or 2028. This expansion outlook comes as the company enters what TD Cowen characterizes as a "new era" with stronger management.
TD Cowen highlighted Planet Fitness’s improved operational discipline under current leadership, noting its "test-read-react philosophy" should better position the company in an increasingly competitive fitness industry landscape.
In other recent news, Planet Fitness has seen several positive developments that could interest investors. Canaccord Genuity raised its price target for the company to $126, maintaining a Buy rating, after a survey showed stable Black Card membership trends and successful market share gains for new locations. JPMorgan also increased its price target to $108, citing promising growth prospects and strong leadership following a visit to the company’s headquarters. Stifel upgraded Planet Fitness from Hold to Buy, setting a new price target of $120, highlighting potential sales growth and legislative changes that could benefit the company. TD Cowen maintained a Buy rating with a $125 target, noting robust member growth and positive sales figures.
Additionally, Planet Fitness held its annual stockholders’ meeting, where several key corporate governance changes were approved, including amendments to its charter and the election of directors. The company introduced the 2025 Omnibus Incentive Plan to enhance employee and director motivation. These developments reflect ongoing efforts to align corporate governance with best practices. Analysts from various firms have expressed confidence in Planet Fitness’s ability to navigate economic challenges and capitalize on growth opportunities.
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