Berenberg slightly raises target price on The Gym Group

(Sharecast News) - Analysts at Berenberg slightly raised their target price on The Gym Group from 115.0p to 121.0p on Friday, stating the firm's new growth plan could very well deliver gains.

Berenberg, which reiterated its 'hold' rating on the stock, noted that The Gym Group shares have risen 9% year-to-date after the company delivered "a decent set" of full-year results.

The German bank also stated that while the commentary on The Gym Group's outlook at its FY 2023 results was positive overall, it believes that more evidence of the new three-fold growth plan was required before it becomes more positive, particularly with regards to closing the pricing gap versus peers.

"There is an opportunity for a recovery, in our view, but closing the gap on pricing may take time and delivering on its planned gym openings will be key to sustaining growth and meeting expectations. Therefore, we remain on the sidelines for The Gym Group," said Berenberg.

"We alter our estimates to reflect the acceleration of site rollouts, with a total of 46 gyms modelled over the next three years - a touch below the company's guided 50. On revenue, we increase our estimates by circa 3% in FY 2024, which is reflective of the new site expansion plans and slightly higher like-for-like growth forecasts. For EBITDA, we increase forecasts by 2%, 5% and 7% in FY24, FY25 and FY26 respectively, driven by better cost control and internal cost reduction programmes."













Reporting by Iain Gilbert at Sharecast.com