Growth in Planet Fitness is nowhere near done, according to Stifel. Analyst Chris O’Cull upgraded shares of the gym chain to buy from hold and raised his price target to $120 from $82. That new objective suggest shares of Planet Fitness could jump roughly 15% from their latest close. The stock has rallied 10% this month after the company reaffirmed its full-year earnings per share, revenue and system-wide same club sales growth. “Recent results suggest gross joins have stabilized, and we believe there are several potential catalysts to keep comparable sales in the mid-to-high single-digit range over the next couple of years,” O’Cull said. “The company has improved its marketing efforts, but we believe there is considerable runway for further improvement,” O’Cull continued, referring to advertising campaigns he has found encouraging given their messaging that emphasizes Planet Fitness’ value as an affordable and nonjudgmental gym. PLNT 1Y mountain Planet Fitness stock performance. According to O’Cull, Planet Fitness locations could see steady improvement in net new unit growth over the next few years given strong top-line performance and ongoing efforts to reduce investment costs. Fueling its strong growth potential is the company’s ability to the pricing of its Black Card monthly membership plan from $24.99 to $29.99 later this year, the analyst noted. Planet Fitness also has “promising avenues” to improve the overall value proposition of its Black Card Spa, by expanding potential upgrades to locations’ spa areas with the availability of spray tanning, red light therapy and cryotherapy services. “We believe tests to upgrade the Black Card Spa are yielding positive results and could provide new reasons to join. Relative to other consumer-facing segments, Planet’s low-cost membership model should also prove relatively resilient in the event of a downturn in consumer spending,” O’Cull said. O’Cull also pointed out that efforts to include gym membership costs under individuals’ Health Savings Accounts could drive memberships for the fitness industry, potentially benefitting Planet Fitness.
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