Morgan Stanley analyst Megan Alexander maintained a Hold rating on Life Time Group Holdings (LTH – Research Report) today and set a price target of $18.00.
Megan Alexander has given her Hold rating due to a combination of factors that suggest a mixed narrative for Life Time Group Holdings’ stock performance. Despite a third quarter EBITDA beat due to favourable cost management and an upward revision of their profit guide, Life Time Group Holdings still fell short of revenue expectations. This, coupled with an unexpected 15% stock movement despite higher numbers, suggests a shift in the company’s narrative. This shift includes less visibility into future growth as membership recovery and price tailwinds lessen, a greater dependence on in-center revenue and sales leverage, and a shift to asset-light opportunities requiring more unit openings to achieve the same level of revenue.
Furthermore, Alexander believes that whilst this move towards asset-light opportunities is a positive one for the company’s long-term narrative and aligns with investor focus areas, it may be met with skepticism in the short-term due to questions about the decision’s motivation and its competitive viability. In addition, her fundamental view remains unchanged, with this report confirming some of the concerns she has previously highlighted. These include a slowing upward revision curve and the played out COVID recovery bull case, leaving her struggling to find a reason to expect a significant re-rating in the near-term. Thus, despite a wide and positive risk/reward skew, Alexander has assigned a Hold rating to Life Time Group Holdings.
In another report released yesterday, Wells Fargo also maintained a Hold rating on the stock with a $16.00 price target.
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Life Time Group Holdings (LTH) Company Description:
Life Time Group Holdings Inc is primarily engaged in designing, building, and operating distinctive and large, multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment, principally in residential locations of major metropolitan areas in the United States and Canada.
Read More on LTH:
- Life Time Reports Third Quarter Fiscal 2023 Financial Results
- Life Time to Acquire Arden Hills Athletic & Social Club Property in Sacramento in Early 2024
- Life Time Group to acquire Arden Hills Athletic & Social Club in Sacramento
- Life Time Group names WellnessSpace Brands as Official Recovery Partner
- Life Time Group upgraded to Equal Weight from Underweight at Wells Fargo
