They also lowered their price target to $50 from $54.
In part, the firm said: "The chain remains in the early stages of a potentially multi-year new center rollout program. We continue to look favorably upon longer term prospects for LTM. Weaker membership trends at the chain lately suggest to us that a recent proliferation of smaller format and often lower cost gym alternatives is increasingly luring existing or potential members away from LTM's largeformat facilities.
"Heightened competitive pressures are unlikely to ease any time soon. We do not foresee the market awarding LTM a premium valuation until membership growth notches consistently stronger," it concluded
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TheStreet Ratings team rates LIFE TIME FITNESS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIFE TIME FITNESS INC (LTM) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, growth in earnings per share, reasonable valuation levels and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LTM's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 5.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- LIFE TIME FITNESS INC has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LIFE TIME FITNESS INC increased its bottom line by earning $2.93 versus $2.68 in the prior year. This year, the market expects an improvement in earnings ($3.08 versus $2.93).
- Net operating cash flow has increased to $67.65 million or 27.92% when compared to the same quarter last year. In addition, LIFE TIME FITNESS INC has also vastly surpassed the industry average cash flow growth rate of -31.16%.
- You can view the full analysis from the report here: LTM Ratings Report