Jefferies analysts believe Planet Fitness's (NYSE:PLNT) growth drivers and value-oriented offering are underappreciated.
The analysts maintained a Buy rating and $100 price target on the stock in a note Friday, stating that they feel PLNT has ample revenue/comp growth opportunities, the consumer trade-down could drive additional upside, and the company's international expansion also remains attractive.
"With ~47% of PLNT's store base on older, lower royalty rate agreements that are set to either renew or increase over the next several years, and the potential for average monthly dues to increase, we believe there is ample opportunity for the company to drive healthy growth longer term," the analysts wrote.
They added that an analysis the firm conducted revealed that a modest increase in the company's average royalty rate, combined with M-HSD% growth in members from 2022-2026, could result in mid-teens % upside.
Furthermore, "a higher-end, consumer-first recession could drive an increasing number of individuals into lower-priced gym offerings," said the analysts.
"PLNT has noted previously it had "a lot" of people trading down from higher-priced gyms in 2008/2009. We conducted a trade-down analysis and found that PLNT could gain an incremental ~110K-550K members due to trade-down from 2023-2026."
PLNT shares are down over 13% year-to-date.