Morgan Stanley ‘Overweight’ on Planet Fitness stock, sees buy on weakness

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On Wednesday, Morgan Stanley reiterated its Overweight rating on Planet Fitness (NYSE:) stock with a steady price target of $79.00. The fitness chain, listed on the New York Stock Exchange under the ticker NYSE:PLNT, has been advised by the firm as a favorable buy on weakness, suggesting confidence in the stock’s potential despite short-term market fluctuations.

The firm’s position is based on a valuation analysis that, even under a theoretical downside scenario, sees the current stock price as undervalued. According to the analysis, Planet Fitness is trading at approximately 15 times its enterprise value to EBITDA (earnings before interest, taxes, depreciation, and amortization), which is notably lower than its historical average. This valuation is just a notch above some of the more challenged quick-service restaurant franchises that trade around 14 times.

The analyst’s comments highlight that while the short-term impacts on business results and market sentiment are not to be underestimated, the valuation presents an attractive entry point for investors. The firm’s stance is that the current market price does not reflect the company’s true value, indicating a potential upside for the stock.

Investors and market watchers will be keeping an eye on Planet Fitness’s stock performance, as the company navigates the market environment and works to meet the expectations set by this target valuation.

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