The Gym Group PLC (LSE:GYM) is in line to keep impressing after solid interims sent shares up almost 8% on Wednesday, according to analysts.
Having upped revenue full-year revenue guidance on Wednesday, Shore Capital analysts said further growth ahead of forecasts was likely in the coming years.
“With continued progress on delivering higher customer revenue yields [...] we see scope to grow average revenue per member beyond what is built into forecasts over the coming periods,” analysts said.
Panmure Liberum analysts echoed the view, highlighting efforts to improve customer acquisition and retention meant there was likely “more to come” from Gym Group.
This follows a 9% increase in prices over the last year, Panmure pointed out, alongside more effective promotions, such as offering memberships without joining-up fees.
Shore Cap also noted the company’s plans to open 30 new gyms over the next three years would “add meaningfully to profitability” in the meantime.
Full-year pre-tax earnings of £43 million were forecast by Shore Cap, in line with Gym Group’s guidance that this should sit at the top end of market expectations for £42 million to £44 million.
This could well come in higher though, Shore Cap said, as the likes of the “key student recruitment period” hit in the autumn.
Panmure reiterated a ‘buy’ rating following the results, adding Gym Group shares were trading at over a 20% discount to pre-Covid levels, despite the company having more than doubled in size since.
A 200p share price target was also set, marking a prospective 39% increase on Tuesday’s close.
Shares climbed 7.8% to 155p on Wednesday.