On Tuesday, RBC Capital Markets maintained its optimistic stance on shares of Planet Fitness (NYSE:PLNT), increasing the fitness chain's price target to $120 from the previous $110, while keeping an Outperform rating on the stock. The firm's analyst cited several reasons for the positive outlook on the company's performance in the upcoming year.
According to the analyst, Planet Fitness is poised to outperform in 2025 due to a combination of factors. Notably, the company's pricing strategy is seen as a key advantage, with price increases remaining below inflation rates and yielding better-than-expected results. There is also potential for further price hikes in 2025.
The fitness chain's strategic adjustments to club formats and layout changes are expected to enhance the member experience and improve franchisee profitability. These updates are part of Planet Fitness's ongoing efforts to refine its operations and offerings to meet consumer demands.
In addition to operational improvements, Planet Fitness is adjusting its brand marketing and messaging to appeal to a wider audience. The analyst anticipates that these changes could lead to accelerated membership growth in the first quarter of the year.
The revised price target of $120 is based on a 19x enterprise value to estimated 2026 earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple. This valuation is consistent with the historical averages for Planet Fitness, suggesting that the new target reflects both the company's growth prospects and its established financial track record.
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