On Friday, Guggenheim analyst team adjusted the stock price target for Life Time Group Holdings Inc (NYSE:LTH) to $32.00, an increase from the previous $29.00, while maintaining a Buy rating on the stock. The adjustment follows Life Time's significant fourth-quarter earnings beat and the release of an above-consensus guidance for the year 2025.
The stock, currently trading near its 52-week high of $27.26, has delivered an impressive 98% return over the past year. InvestingPro subscribers can access detailed valuation metrics and 13 additional expert insights about LTH's market position.
Life Time Group, known for its premium brand in the fitness and lifestyle sector, reported a 19% increase in fourth-quarter sales. This performance aligns with the company's strong revenue growth of 18.12% over the last twelve months, reaching $2.52 billion.
The sales rise was attributed to a 12% increase in per-member spend, which includes monthly dues and in-center services. The company's growth strategy focuses on the existing members' consumption capacity, which is expected to continue into 2025.
The firm's analysts were encouraged by the company's ability to grow its top and bottom lines significantly without incurring substantial incremental costs. They noted that the EBITDA margin has stabilized at 26%, which is an improvement over the previous target range of 24-25%. This financial stability is seen as a positive indicator of the company's profitability and efficiency.
The updated guidance for 2025 also suggests that Life Time Group's deployable cash is on track to potentially approach $400 million, exceeding Guggenheim's original projections. This robust financial outlook underpins the firm's decision to raise the price target and reaffirm the Buy rating.
The analysts concluded their commentary by highlighting the attractive valuation of Life Time Group shares, even at the new price target level. They pointed out that the EBITDA multiple is just 9.7 times, which suggests that the stock could still offer value to investors at the updated price target.
However, InvestingPro analysis indicates the stock may be overvalued at current levels, with a P/E ratio of 34.8x and significant debt burden. For comprehensive valuation insights and access to the detailed Pro Research Report, investors can explore the full analysis on InvestingPro.
In other recent news, Life Time Group Holdings, Inc. reported preliminary fourth quarter results for 2024, surpassing analyst expectations with an estimated total revenue increase of 18.5% to $661-$663 million. Adjusted diluted earnings per share for the quarter are expected to rise to $0.24-$0.25. For the full year 2024, the company projects total revenue to grow 18.2% to $2,619-$2,621 million, exceeding the $2,600 million analyst forecast.
Looking ahead to fiscal 2025, Life Time anticipates total revenue to climb 12.2% to $2,910-$2,970 million, significantly above the $2,800 million analyst consensus. This positive outlook is attributed to growth in memberships, membership dues revenue, and in-center revenue, coupled with an efficient operating model that has led to expanding margins.
These are recent developments that highlight the company's strong performance and optimistic outlook for the future. The company plans to release its full fiscal year 2024 results on February 27, 2025.
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