BofA Warns on Planet Fitness After Earnings

Bank of America issued the warning in a research note to clients after Planet Fitness released quarterly results, writing that the company missed key metrics and that management's outlook reduced visibility for the coming quarters.

BofA flagged softer-than-expected member additions and a slowdown in comparable club performance as the main concerns, and it noted that fees paid by franchised clubs to the parent and corporate-level margins could face pressure, affecting earnings per share.

Analysts at the bank cut revenue and profit forecasts and trimmed the firm's view of near-term upside. They pointed to increased promotional activity and competitive pricing in the sector as factors that could compress membership yields.

Planet Fitness' model combines corporate-owned clubs with franchised locations and depends on recurring membership fees and steady unit expansion. BofA interpreted the company's disclosures as indicating a slowdown from its prior higher-growth pace.

The bank advised clients to reassess growth and profitability assumptions when valuing Planet Fitness shares and recommended watching monthly membership trends, same-club metrics and the cadence of new franchise openings and royalty and fee revenue.

BofA also highlighted sensitivity to broader consumer spending patterns, noting that weaker discretionary spending may affect sign-ups and retention at low-cost gyms.