After Q4 Miss From Planet Fitness, 4 Analysts On What's Ahead For Gym Chain

Shares in Planet Fitness Inc. PLNT were trading lower Friday after the company reported dismal fourth-quarter results. Revenue took a big hit due to the coronavirus pandemic and resulting gym closures. 

Planet Fitness was also unable to provide 2021 guidance.

It’s not all bad news, however, and analysts believe the bottom for Planet Fitness may be in. With the rollout of vaccines, Planet Fitness plans to restart its marketing campaign, paused since March 2020, and said the brunt of its lost revenue came from the inability to acquire new members as opposed to cancellations, although it did suspend payments from existing customers while gyms were closed.

On the conference call, Planet Fitness CEO Chris Rondeau highlighted that as of now, 90% of its locations have reopened.

Planet Fitness reported fourth-quarter adjusted EPS of 17 cents, missing the estimate of 22 cents, and total revenue of $133.8 million, missing the Street estimate of $137.2 million. 

Planet Fitness Ratings, Price Targets: D.A. Davidson maintained a Buy rating and raised the price target from $80 to $93.

Raymond James maintained a Market Perform rating.

Roth Capital maintained a Neutral rating and raised its price target from $62 to $75.

Wedbush mainted a Neutral rating and $69 price target. 

Raymond James On Planet Fitness: Although Planet Fitness’ revenues fell shy of expectations, it was expected due to the impacts of the pandemic, analyst Joseph Altobello said in a note.

Membership may have bottomed, the analyst said, adding that reduced store outlooks may weigh on future profitability.

Despite an expected loss of some members during the course of the pandemic, Altobello said Planet Fitness added 300,000 new memberships in January, which he said is encouraging.

Altobello sees Planet Fitness’ forecasted 75-100 new stores for 2021 as concerning, given that it opened 130 new stores during the 2020 year.

Wedbush On Planet Fitness: Despite how quickly Planet Fitness stores and gyms will be able to fully open, the company’s recovery faces further delays, analyst James Hardiman said in a note.

That's due to an apparent acceleration in member cancellations late in the fourth quarter and the time needed to restart the new club pipeline, the analyst said. 

Some members may be reluctant to return due to lingering fears about working out among others, he said. 

Planet Fitness securing 300,000 more members in January is a positive sign — but also an expected one, Hardiman said, due to it being the season of New Year's resolutions

Like Altobello, Hardiman said he finds the company’s low number of planned new franchise openings for 2021 disappointing.

D.A. Davidson On Planet Fitness: Analyst Linda Bolton Weiser lowered 2021 estimates for Planet Fitness based on a lower number of planned 2021 store openings, lower reported equipment sales and sales growth that she does not expect to turn positive until the fourth quarter.

The company has the potential for strong growth in 2022, the analyst said. 

Roth Capital On Planet Fitness: Roth is also lowering its estimates for 2021 based on fewer planned gym openings, a slower ramp up in new memberships and lower equipment sales, analyst George Kelly said in a note. 

The analyst said he expects a gradual rebound in 2021 and notes that typical seasonality maybe not happen this year, with Planet Fitness seeing higher-than-usual membership growth during the summer.

Planet Fitness reported $1.8 billion in debt, and Kelly said he believes debt paydown for the company is a high priority.

PLNT Price Action: Planet Fitness shares were down 1.65% at $78.45 at last check Friday.