By Sam Boughedda
Planet Fitness (NYSE:PLNT) hosted its first investor day since its IPO in New York on Tuesday, with analysts at Morgan Stanley and BofA reacting positively to the event.
The event featured six members of Planet Fitness' senior leadership team.
Morgan Stanley analysts reiterated an Overweight rating and $88 price target on Planet Fitness shares, saying the company's top-line targets suggest upside potential.
"The financial targets suggest modest upside to Street numbers and our own on top line/EBITDA (detail below), while more regular repurchases are an added EPS growth driver. More broadly, the potential to ~double membership and exceed the 4,000 US unit potential is a key debate for the stock, as is unit growth acceleration in a slowing economy near term, but the company provided more detail on fortifying its competitive lead over peers, driving membership, and its clear track record of expanding unit potential in specific markets as it matures and the franchisee base that supports this. These reinforced faith in the targets, in our view," wrote the analysts.
Meanwhile, BofA stated that price accessibility and Gen Z acquisition should drive long-term growth for the company.
"Longer-term PLNT plans to double its global membership base to 33mm+ which we estimate would imply a ~4,400 club opportunity (assuming 7,500 members per club). PLNT did not update its domestic unit opportunity, but we estimate at 4,000 clubs would imply ~10% penetration of U.S. population age 15+ assuming current population growth (vs. 6% currently & in-line with New Hampshire penetration). We see significant opportunity internationally (vs. 88 clubs currently), especially given low gym membership penetration in current markets incl. Canada (17%), Australia (15%), Mexico (3%), and Panama (2%)," wrote the analysts, who have a Buy rating and a $94 price target on the stock.
Planet Fitness shares are down over 2% at the time of writing on Wednesday.