The Gym Group PLC (LSE:GYM) remains one of Deutsche Bank's preferred stocks in the leisure sector, with the broker arguing that powerful demographic and health trends continue to support long-term growth.
Analyst Tim Barrett reiterated a 'buy' recommendation and a 230p target price on the budget gym operator, compared with Tuesday's closing price of 207p.
Barrett said the company was particularly well positioned to benefit from younger consumers' growing focus on fitness and wellbeing.
Around 44% of Gym Group's members are in 'Gen Z', roughly aged 18-34, a cohort the broker believes places a greater emphasis on health, appearance and physical fitness than previous generations.
The bank also highlighted the growing use of GLP-1 weight-loss drugs as a potential tailwind for the industry.
While some investors have questioned whether treatments such as Wegovy and Mounjaro could reduce demand for gyms, Deutsche Bank pointed to survey data showing that around 60% of users believe it is important to increase their exercise levels while taking the medication.
The broker said Gym Group's low-cost model was well suited to attracting value-conscious consumers seeking flexible fitness options.
Deutsche Bank described the company as one of its top picks in the mid-cap leisure sector and said structural growth drivers remained firmly in place despite broader economic uncertainty.
The bank's latest research included a fitness sector survey and observations from a recent visit to one of the group's London sites.
