Piper Sandler says now is an opportune time to load up on shares of Planet Fitness . Analyst Peter Keith upgraded the gym stock to overweight from neutral, saying in a note to clients Monday that shares are trading at attractive levels relative to peers and should benefit from strong participation levels among younger generations. “Importantly, considering potential for a slowing consumer spending environment in 2023, we have a higher degree of confidence in PLNT estimates versus other more discretionary names in our coverage universe,” he wrote. “PLNT should not only be a trade-down beneficiary in a slowing economy, but also is still rebuilding back to pre-COVID member levels – and we have outlined building blocks to comp upside for 2023.” Keith highlighted results from a recent teen survey as proof of the company’s growing interest among younger generations, with 48% of teens who participated in Planet Fitness’ teen summer plan indicating they plan to become paid members. “Our 2023 comp build assumes a more conservative amount of 30% of participating teens becoming paid members – equating to a comp lift of +3%,” he said. While shares are down more than 36% this year, Piper Sandler expects a potential 22% gain in the near term given the bank’s revised $70 price target (down from $73). Keith noted that recent app download data suggests positive new membership trends while increases to the company’s black card membership price should help lift comps in 2023. “All in, we think Black Card pricing will provide a +2% comp benefit starting partially by 4Q22 and fully kicking with Q1 2023 – and lasting throughout 2023,” Keith said. — CNBC’s Michael Bloom contributed reporting
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