KeyBanc Capital Markets Downgrades Life Time Fitness To Hold (LTM)

KeyBanc Capital Markets downgraded Life Time Fitness LTM to Hold from Buy in a research report published today. In the report, KeyBanc states, "While we are firm supporters of the longer-term opportunities that exist for LTM in the way of accelerated unit growth as well as the build out of the lifestyle concept, our tactical downgrade is based upon some near-term issues, coupled with a premium valuation (approximately 19x 2011E), that we expect to limit meaningful upside in stock performance, including: 1) We are concerned that 2011 First Call Consensus expectations of $2.34 per share may be too high and we do not believe LTM has as many levers to pull as in 2009/2010; 2) Operating margin expansion will likely be constrained in 2011, given negative mix and the continued ramp in investments being made in lifestyle initiatives, which are driving center operating margins lower; and 3) Key operational metrics, including attrition, will likely begin to moderate after experiencing meaningful improvement during the past few years." Shares of Life Time Fitness closed Thursday at $43.34, down 1.52% from Wednesday's market close.