Planet Fitness stock has emerged as a “tough one” following a series of rapid company changes, according to JPMorgan. The firm downgraded the gym stock to neutral from overweight rating in a Tuesday note, and lowered its price target to $52 from $70. JPMorgan’s forecast implies roughly 7% upside from Monday’s $48.50 close. Planet Fitness stock has slipped more than 38% from the start of the year. PLNT YTD mountain Planet Fitness stock. Analyst Rahul Krotthapalli noted that the surprise ousting of chief executive Chris Rondeau coupled with shaky economics could signal the company isn’t fully embracing a “focused on the future” approach. Rondeau was replaced by company board member and former New Hampshire Gov. Craig Benson, who will assume an interim role. A permanent CEO has yet to be announced, however. Rondeau was a nearly 30-year company veteran, and his ousting came largely as a surprise to Wall Street. “While our initial impression of the board member as the interim CEO Craig Benson is of a capable, highly experience driven executive, we look forward to the permanent replacement,” Krotthapalli said. “Improving franchise level unit economics, hence driving future unit growth will be ( & should be) the first goal for the new CEO.” The analyst added that the addition of new franchises and extensive remodels to existing facilities isn’t likely to occur in the near-term due to the higher cost of capital. “Expecting franchisees to both remodel stores & build new one in a higher cost of capital environment is likely unrealistic, especially with the added complication of fewer [20,000 square-foot] properly located boxes available for the brands,” Krotthapalli said. — CNBC’s Michael Bloom contributed to this report.
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