Planet Fitness 4Q Preview: Price Hikes Could Be Accretive, Says Bullish Analyst

As Planet Fitness Inc. (PLNT) prepares to report its fourth-quarter earnings, analysts are weighing in on the company's recent price hikes for new members and their potential impact on the company's financial projections. Logan Reich, an analyst at RBC Capital Markets, has maintained an Outperform rating and raised the price target to $120, suggesting a significant upside potential for the stock. However, the overall consensus among analysts is a Buy rating, with an average price target of $86.00, which is lower than Reich's target.

RBC's analysis suggests that the risk of a slowdown in new members due to competition is less than currently priced in. Only 3.6% of all Planet Fitness' locations face competition from a cheaper competitor within a 1-mile radius, and members typically drive only 4 miles to a gym on average. Even within a 5-mile radius, where 22% of PLNT locations have a cheaper competitor, members are unlikely to switch to a cheaper alternative due to the increased driving time. This limited competition, coupled with Planet Fitness' continued value proposition, suggests that the price hike could be accretive to earnings.



The analyst's bullish stance is driven by the expectation that consensus estimates could be raised by 1.2% for system sales and by 2.1% for EBITDA for 2025. This indicates that the price hike could have a positive impact on the company's financial performance in the next quarter and beyond. However, other analysts might have different views on the sustainability and growth potential of Planet Fitness' financial performance, contributing to the differing opinions among analysts.



In conclusion, while there is some uncertainty surrounding the impact of the price hike on customer acquisition and retention rates, the limited competition and continued value proposition offered by Planet Fitness suggest that the risk of a slowdown in new members is manageable. This could ultimately have a positive impact on the company's growth trajectory. However, the differing opinions among analysts highlight the importance of considering multiple perspectives when making investment decisions.