Planet Fitness Price Target Raised to $106 at Morgan Stanley
Morgan Stanley raised their base stock price forecast on Planet Fitness to $106 and said a key driver for the stock, the beat in 4Q reinforces our view that 2022 will see continued acceleration potentially back to 200+ new units.
Planet Fitness, which releases its next earnings on February 17, will show its strengths. The Hampton, New Hampshire-based operator and franchiser of fitness centres is expected to report its fourth-quarter earnings of $0.24 per share, which represents year-on-year growth of over 40% from $.17 per share seen in the same period a year ago. The company would post revenue growth of over 30% to around $174 million.
Last year, Planet Fitness shares surged nearly 17%. On Thursday, the stock closed 3.24% lower at $89.62.
“Member gains, ’21 development ahead of guidance reinforce key elements of our OW thesis and set up a favourable ’22. A large franchisee acquisition increases operating leverage for the recovery and should be EPS accretive; business mix shifts but franchising will remain the main growth driver,” noted Brian Harbour, equity analyst at Morgan Stanley.
Morgan Stanley gave the stock price forecast of $140 under the bull scenario and $72 under the worst-case scenario. Other equity analysts also updated their stock price outlook. Stifel raised the target price to $105 from $100. Cowen and company lifted the target price to $110 from $100. D.A. Davidson upped the target price to $110 from $105.
Twelve analysts who offered stock ratings for Planet Fitness in the last three months forecast the average price in 12 months of $102.08 with a high forecast of $115.00 and a low forecast of $85.00.
The average price target represents a 13.90% change from the last price of $89.62. Of those 12 analysts, nine rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.
“As the largest fitness club chain by system sales in the US, Planet Fitness (PLNT) fortified its competitive position in recent years, and came through Covid with no closures, while +20% of industry capacity closed. Marketing, tech, development scale are increasingly important,” Morgan Stanley’s Harbour added.
“Strong history of SSS growth driven by pricing, Black Card mix, marketing and density to drive traffic; Covid recovery likely extends into ’22 in our view, while unit growth should pick back up to +200/yr range by ’23 driven by a strong franchised model and strong unit economics. Value players less threatened by at-home fitness. Underperformance vs key benchmarks and discount to pre-Covid highs present a more compelling entry point.”
Technical analysis suggests it is a good time to buy as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.
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