The Gym Group PLC (LON:GYM) has been reinitiated at an ‘overweight’ rating and 220p target price by analysts at Barclays, who said the firm now offered a “sufficiently attractive” risk/reward profile.
However, in a note on Tuesday, the bank warned that the company’s membership numbers would be the “critical factor” in the investment case, adding that a 5% change in membership could result in a fair value fluctuation of 30%, making it “high risk”.
READ: The Gym Group keeps venues open, sheds 2% of members in two weeks
The bank said to break even the company would need a membership at 86% of the February 2020 level, although they said their forecasts were based on a 90% membership rate in the company’s 2022 financial year.
If the target membership level was reached, Barclays said the share price could rise to 400p, although if the numbers fell to 75% of February 2020 levels this could tumble to a fair value of 45p.
Gym Group shares were 1% higher at 179.6p in mid-morning trading.