Planet Fitness (PLNT) tried to break out after a Jefferies analyst said the fitness-center chain has an “Amazonian business model” with more insulation to potential competition. Planet Fitness stock rose above a flat-base buy point soon after Friday’s stock market open, but shares quickly reversed and closed slightly lower.
Planet Fitness Business Model
Jefferies analyst Randal Konik on Friday upgraded Planet Fitness stock to buy from hold. He also raised the price target on Planet Fitness stock to 75 from 49.
According to a brief write-up of that note on The Fly, a financial news site, Konik said Planet Fitness was benefiting from an increasingly wellness-minded consumer. And he said the fundamentals of its business “resemble Amazon’s successful model.” He also cited the company’s expanding store count, advertising resources and efforts on the digital front, according to The Fly.
Planet Fitness advertises itself as a less intimidating, more judgement-free gym, helping boost its popularity. As of Sept. 30, it had nearly 1,650 stores and some 12.2 million members.
Nearly half its members are millennials, giving it a healthy “generational tailwind,” William Blair analysts said in a research note last week. Seven percent of the total U.S. millennial population had a membership there, the analysts said.
Planet Fitness Stock Technical Analysis
Planet Fitness stock jumped to a record high of 61.51 soon after the open, above a 59.62 flat-base entry. Shares reversed to close down 0.45% at 57.99, just above session lows in the stock market today.
The relative strength line has been rebounding, after reaching new highs last month. The RS line, the blue line in the chart below, measures a stock’s performance against the S&P 500. It’s a good way to tell if a stock is a leader or laggard.
Planet Fitness has an IBD Composite Rating of 90 out of a best-possible 99.
Planet Fitness earnings for the fourth quarter are due Tuesday. Wall Street expects Planet Fitness earnings per share to jump 33% to 32 cents, with revenue up 31% to $175 million.
Amazon Helps Planet Fitness Gyms Expand
Unlike other businesses that depend on physical stores to operate, Planet Fitness’ core product, exercise, can’t exactly be replicated online. Amid the yearslong hollowing out of the nation’s malls, in no small part due to Amazon.com (AMZN), Planet Fitness could have more places to set up shop.
During an earnings conference call last year, Planet Fitness said it would “work to build upon our current momentum as brick-and-mortar retail continues to be under pressure from online businesses.” Management added that “landlords are increasingly looking to Planet Fitness to drive traffic in their centers.”
Still, when the company reported earnings in November, Wedbush analyst James Hardiman noted that same-store sales had slowed for three consecutive quarters, even as it planned to open more stores.
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