Planet Fitness (PLNT) Tests Resistance

Planet Fitness, Inc. (PLNT) shares rose nearly 2% during Wednesday’s session after two analysts issued a bullish outlook for the troubled gym stock.

Key Takeaways

  • Planet Fitness stock is trading down more than 13% so far this year due to the impact of the COVID-19 pandemic on gyms across the United States.
  • Piper Sandler and Baird analysts believe that the stock could see a quick recovery given favorable gym openings and stabilizing membership.
  • The stock has more room to run from a technical standpoint, but traders should watch for resistance at $80.00 and support at $50.00 levels.

Piper Sandler reiterated its Overweight rating on the stock and raised its price target from $61 to $81 per share following investor meetings with management. Analyst Peter Keith sees the company as a compelling recovery name due to moderating member cancellation trends for gyms open several months and a national advertising campaign starting next week that should help new member growth.

Similarly, Baird said that it sees upside potential following encouraging reopening progress and strong customer demand across fitness categories. In particular, the firm sees a favorable risk/reward profile given the recent progress on state-level reopenings, which should help stabilize membership trends near 14 million this year and enable Planet Fitness to recapture pre-COVID member levels by the second half of 2021.

TradingView.com

From a technical standpoint, the stock moved toward reaction highs and its 200-day moving average near $64.29 during Wednesday’s session. The relative strength index (RSI) remains slightly overbought with a reading of 61.20, but the moving average convergence divergence (MACD) continued its bullish move higher. These indicators suggest that there’s more room for upside before further consolidation.

Tip

Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price.

Traders should watch for a breakout from the 200-day moving average at $64.29 in the near term and a potential move to retest highs of around $80 made in June. If the stock moves lower, traders could see a move toward the 50-day moving average at $57.17 or reaction lows of around $50.00.

The Bottom Line

Planet Fitness shares moved about 2% higher during Wednesday’s session after a pair of favorable analyst comments. While the stock is trading down so far this year, the analysts believe that membership is rebounding and that the stock could move to $80.00 levels.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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