Investors should buy Planet Fitness as the gym chain undergoes a rapid expansion plan that will double the number of locations, according to JPMorgan.
"We see above average long-term franchise driven unit growth of 10-15 percent plus and a strong history of positive SSS (same store sales) growth expected to drive 10-15 percent adjusted EBITDA growth," JPMorgan's John Ivankoe wrote in a note to clients Monday.
He added, "Unit development is the primary driver of value, as this influences franchise fees, placement revenues, equipment sales and royalty growth. "
The analyst resumed coverage of Planet Fitness with an overweight rating and a $22 price target, representing 24 percent upside from Friday's close. The gym chain had its IPO last August.