Planet Fitness Rises After Update On Store Reopenings, Lifts Fitness Peers

Shares of Planet Fitness (PLNT) are on the rise on Tuesday after the company announced that as of June 1 the company had reopened approximately 800 stores across 30 states and one province in Canada. Seeing the update as positive for both Nautilus (NLS) and Peloton Interactive (PTON) as well, Roth Capital analyst George Kelly argued that the news validates the strength of Planet Fitness’ brand and value of its offering.

STORE REOPENING UPDATE: Planet Fitness announced in a regulatory filing that as of June 1 the company had reopened approximately 800 stores across 30 states and one province in Canada. The company anticipates that an additional 200 stores may be able to open by mid-June. "At the locations that have reopened, the company has experienced the following results to date: overall average membership levels have remained relatively consistent compared to the day the store reopened, while both joins and cancels have increased compared to the same time period last year; store usage at reopened stores that have been open at least two weeks has increased between the date of reopening and May 31, 2020, with usage indexing at approximately 60% compared to the same time period last year; and Black Card membership percentage for new joins has been approximately 60%, which is consistent with historical levels," Planet Fitness said.

BRAND STRENGTH: Roth Capital analyst George Kelly raised the firm's price target on Planet Fitness to $70 from $58, while keeping a Neutral rating on the shares after the company disclosed cleanliness protocols and member trends at the 800 gyms that have reopened. The analyst highlighted that of the locations that have reopened, overall average membership levels remained relatively consistent compared to the day the store reopened. Kelly views the news as positive as he was concerned there would be a more immediate impact to member levels and usage.

The analyst also believes the update validates the strength of Planet Fitness' brand and value of its offering, and sees it as positive for Buy-rated Nautilus and Peloton Interactive. Further, the announcement is also positive for the broader consumer/leisure sector as it shows that consumers are willing to resume routines and activities that may involve heightened COVID-19 risks, he contended.

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