UBS has initiated coverage on a group of fitness stocks, assigning ‘Buy’ ratings to Planet Fitness (NYSE:PLNT) and Life Time (NYSE:LTH) and ‘Neutral’ ratings to Xponential Fitness (NYSE:XPOF) and Modern Golf (NYSE:MODG).
They noted growing consumer interest in health and wellness, especially among Gen Z, with 82% of US consumers now considering health and wellness a top priority, up from 50% in 2022.
UBS said it prefers companies with “asset-light business models that are scalable with durable growth outlooks that capitalizes on affordable fitness offering or more premium holistic health club approach, with seamless integration of digital platforms.”
For Planet Fitness, UBS highlighted its scalable model and growth potential, awarding it a $125 price target. Shares currently trade at $94.
“Our deep-dive analysis of growth drivers suggest EBITDA upside of $208 million to $245 million by 2027 on run rate basis for PLNT while current valuation multiples imply roughly half of that upside for PLNT,” they wrote.
“Despite market concerns over the health of the lower end consumer, we see its more recession resilient asset-light business model as scalable with durable growth outlook driven by a healthy pipeline of units.”
The analysts project EBITDA growth of 12% to 13% through 2027, above Street estimates, and cited catalysts including a Black Card price increase and the company turning more asset-light in Spain.
Life Time’s premium positioning and holistic approach were highlighted by UBS. “Our checks suggest pipeline depth could support acceleration in new unit openings,” they wrote.
The analysts noted that EBITDA growth from ramping clubs, new openings, and pricing improvements could exceed current market expectations.
“We see risk/reward favorable with a price target of $43,” they wrote, which implies upside from its current share price of $25.
For Xponential Fitness, UBS highlighted potential risks to growth, assigning it an $8 price target as the stock trades at about $7.
“We could see risk to XPOF’s 10% net unit growth guide into 2026 to 2027, and we believe closures could come in toward higher end of low to mid-single digit percentage expectations,” they wrote.
“Despite an asset-light franchise model, there could still be risk to our estimates of flattish revenues for 2026, after -6% to 7% decline in 2025.”
Modern Golf faces a more uncertain growth outlook. UBS believes.
“We see a less clear path for the golf business to grow next year, while same-store growth for Topgolf remains challenging,” they wrote, giving the stock a $10 price target. Shares traded at about $9 on Friday.
The analysts added that separating the two businesses could create a cleaner story but might limit upside due to dis-synergies.