Planet Fitness (NYSE:PLNT), a major player in the fitness industry, has garnered a positive outlook from the Royal Bank of Canada (RBC), which reaffirmed an “outperform” rating and issued a $120 price objective for the company’s shares. This endorsement comes amid a series of strategic moves and positive financial indicators for the fitness franchise, suggesting a strong growth trajectory for the coming year.
Analyst Confidence and Price Target
RBC Capital Markets has expressed its confidence in Planet Fitness by raising its price target from $110 to $120, while maintaining an “outperform” rating. This decision reflects the bank’s positive outlook on the company’s performance, with analysts citing a combination of factors that position Planet Fitness for success in 2025. Other firms have also recently weighed in on Planet Fitness stock, with Raymond James increasing their target price to $110 and giving the stock a “strong-buy” rating. TD Cowen also maintained a Buy rating on the stock with a $120 price target. However, not all analysts are as bullish, with some setting a lower average 12-month price target of $93.53.
Strong Financial Performance and Growth
Planet Fitness has demonstrated robust financial health and growth, ending 2024 with approximately 19.7 million members across 2,722 clubs in various countries. The company’s strategic price increases, particularly the first rise in the Classic Card membership price in 25 years, coupled with higher utilization rates, are expected to contribute to further financial gains. Moreover, Planet Fitness has shown a 5% increase in same-club sales, and a 5.3% revenue growth, highlighting the effectiveness of its business model and marketing strategies. The company’s revenue in 2025 is forecast to be $1,126,290,000. Planet Fitness’s earnings in 2025 are projected to be $160,298,000, with a forecast annual earnings growth rate of 36.06%.
Key Performance Metrics
- Membership Growth: Reached 19.7 million members by the end of 2024.
- Same-Club Sales: Increased by 5% year-over-year.
- Club Expansion: Opened 150 new clubs, including 21 corporate-owned locations.
- Revenue Growth: Delivered 5.3% revenue growth.
- Strategic Initiatives: Introduced a new economic model, refinanced debt, and initiated a share repurchase program.
Strategic Initiatives and Future Plans
Planet Fitness is not resting on its laurels. The company is actively pursuing several strategic initiatives to solidify its position and further expand its reach. These include:
Evolving Brand Strategy
The company is redefining its brand strategy to move beyond simply attracting people off the couch. Their goal is to broaden their audience to include current and previous members, non-members, and even members of other gyms. This involves reinforcing Planet Fitness’ authentic, judgement-free environment and inspiring first-time gym goers.
Enhanced Member Experience
Planet Fitness is focused on deepening member relationships through new and unique digital features via its mobile app. This aims to engage members both inside and outside the gym, creating an enhanced member experience. This includes adjustments to club formats and layout changes to enhance the member experience and improve franchisee profitability.
Franchise Growth Model
The fitness franchise is experiencing strong interest in its new growth model, which includes extending Area Development Agreements (ADA) from ten to twelve years, relaxing remodel requirements from ten to twelve years, and adjusting re-equips from five to seven years to six to seven years. The company is also looking to partner with bigger landlords to secure more opportunities for expansion.
Leadership and International Expansion
Planet Fitness has strengthened its leadership team with new executive appointments, such as Chip Ohlsson as chief development officer and Brian Povinelli as chief marketing officer. These leaders bring significant experience in leading consumer-facing brands. The company also plans to accelerate international growth, bringing its “Judgement Free” approach to more countries.
Navigating Economic Challenges
Despite the positive outlook, Planet Fitness is navigating some challenges. The company has had to address inflationary pressures and a challenging economic landscape. Interim CEO Craig Benson has highlighted that inflation has made new construction especially difficult, and the process of opening new clubs has slowed to 12-14 months due to permitting delays and difficulty in finding retail space. Interest rate increases have added further financial pressure. Despite these challenges, the company has made meaningful strides in its financial performance without significantly impacting profit and loss.
Stock Performance and Analyst Ratings
Planet Fitness’s stock (PLNT) has shown strong performance, with a recent 3.05% increase in the past 24 hours and a 42.54% increase over the last year. The stock reached an all-time high of $102.90 on December 16, 2024. The current price of PLNT is $104.65 as of January 14, 2025. The stock is currently considered a strong buy by analysts, with the majority of them rating the stock a “buy”. According to one source, the average analyst rating is “Buy”, with a 12-month stock price forecast of $93.53. However, it’s important to note that other sources indicate a higher average price target. The stock is also considered 4.13% volatile.
Analyst Consensus
- Rating: “Buy” or “Strong Buy” consensus from multiple sources.
- Price Target: Varied, with RBC at $120, but the average across 17 analysts is $93.53.
- Upside Potential: The average price target of $107.54, according to one source, represents a 6.02% upside potential.
Looking Ahead
Planet Fitness’s leadership is focused on executing its strategic objectives as the company moves into 2025. The company plans to release its full fiscal year results and provide a 2025 outlook on February 25, 2025. The fitness chain’s strategic adjustments to club formats, marketing, and pricing are expected to enhance the member experience and drive further growth. RBC’s positive outlook and increased price target further reinforce the company’s potential for a successful year.