One week after Fortune magazine ranked Planet Fitness (PLNT) - Get Report 58 out of 100 of the world's fastest-growing companies in 2019, the stock was downgraded from buy to hold by analysts at Berenberg Capital Markets.
The magazine's Aug. 22 ranking is based on the world's top three-year performers in revenue, profit and stock returns.
Berenberg, however, lowered the stock of the "home of the Judgement Free Zone" to hold and cut its price target to $69 from $80.
Despite its good second-quarter results, a team led by Alex Maroccia deems the stock properly valued and "sees few near-term catalysts that would cause the stock to positively re-rate."
On Aug. 6, Planet Fitness reported second-quarter results that beat expectations on revenue and adjusted earnings before interest, taxes, depreciation and amortization.
Management upped its projected new-store count 250-260 gyms from 225, its revenue growth from 15% to 18%, and adjusted EPS growth from 25% to 26%.
Berenberg forecasts an 11.8% sales compounded annual growth rate from 2019 to 2021.
"Planet Fitness has nearly doubled replacement equipment sales as a percentage of total equipment revenue from 24% in 2015 to an estimated 46.6% in 2019," the analysts said.
"We view this favorably, especially when considering that we forecast revenue from replacement equipment to constitute 18.4% of group revenue and 11% of group EBITDA in 2019."
Analysts estimate the stock trades at 24 times 2020 estimated enterprise value/EBITDA vs. the 19 times at franchise peers. (Due to the lack of traded fitness centers, analysts used restaurants for comps.)
"While we believe a premium is warranted, the shares look fairly valued to us at current levels," the Berenberg analysts wrote.
According to FactSet, the stock's average rating and price target are overweight and $81.82. The stock closed Tuesday off 5% at $67.08.