On Thursday, Planet Fitness (NYSE:PLNT) maintained its Neutral rating and a price target of $62.00, as confirmed by DA Davidson. The fitness chain has launched a $280 million Accelerated Share Repurchase (ASR) program to buy back approximately 3.9 million shares. This strategic move is intended to mitigate the dilutive effect on the company's 2024 estimated earnings per share (EPS) resulting from recent debt refinancing activities.
The company has also reaffirmed its 2024 EPS growth forecast, expecting an increase of 7% to 9% year over year. This projection includes the anticipated higher interest expenses and a reduced share count. Following adjustments to financial models, DA Davidson has increased its 2025 EPS estimate for Planet Fitness by $0.02, bringing it to $2.82.
The firm expressed a cautious optimism regarding the potential impact of Colleen Keating, the new CEO, on the company's future, particularly in terms of accelerating the pace of new store openings. However, DA Davidson remains skeptical that significant changes can be achieved in this area over the next few years.
The current price target of $62.00 is based on a 22 times multiple of the revised 2025 earnings per share estimate of $2.82. DA Davidson has indicated that this price target is under review pending further insights from the new CEO's strategy and plans for the company.
In other recent news, Planet Fitness, a major player in the fitness industry, has successfully completed a significant refinancing transaction, issuing $800 million in securitized notes. The notes, divided into two tranches, carry fixed interest rates and varying repayment dates. The proceeds from this placement will serve multiple purposes, including repaying outstanding notes and funding general corporate activities.
In addition to this financial move, Planet Fitness has seen significant changes in its leadership with the appointment of new CEO, Colleen Keating. Analyst firms have also updated their ratings for the company, with Jefferies upgrading its stock rating from Hold to Buy, and JPMorgan shifting from Neutral to Overweight, while Stifel downgraded the stock from Buy to Hold.
For Q1 2024, Planet Fitness reported a 6.2% increase in same-store sales and an 18% rise in adjusted EBITDA. The company has also increased the price for its Classic Card membership. These are among the recent developments that the company has announced, demonstrating its proactive approach to navigating its growth and challenges.
InvestingPro Insights
As Planet Fitness (NYSE:PLNT) engages in strategic initiatives like the Accelerated Share Repurchase program, real-time data from InvestingPro offers additional insights into the company's financial health and stock performance. The company's market capitalization stands at a robust $6.35 billion, reflecting investor confidence. With a notable gross profit margin of 62.35% in the last twelve months as of Q1 2024, the company's profitability measures appear strong. However, the P/E ratio of 41.41 suggests a high earnings multiple, indicating that the stock may be valued aggressively compared to its earnings.
InvestingPro Tips highlight that while the stock is currently trading near its 52-week high, with a price of 95.61% of that peak, analysts predict that Planet Fitness will remain profitable this year, supported by a significant return over the last week of 9.93%. Notably, the company does not pay dividends, which could be a factor for investors seeking income. For those interested in a deeper dive, InvestingPro offers additional tips on the company's financial health and stock performance. With the use of coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights, which include 7 more InvestingPro Tips for Planet Fitness.
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