Gyms and fitness clubs were hit hard at the beginning of the COVID-19 pandemic because lockdowns and partial capacity operations caused these businesses to suffer revenue and profit declines. However, with effective vaccinations and a receding threat from the omicron variant, gyms have been reopening gradually. Also, there has been a significant increase in fitness and wellness awareness, given the remote lifestyles. Fitness companies are also investing heavily in software platforms.

Pandemic-induced consumer behavior included people exercising at home via virtual workouts and at-home equipment. This resulted in great business for interactive fitness companies. Indeed, based on a report by Emergen Research, the global interactive fitness market size is projected to reach $7.56 billion in 2028, growing at an 8.3% CAGR.

Given these factors, Wall Street analysts expect gym stocks Peloton Interactive, Inc. (PTON), Life Time Group Holdings, Inc. (LTH), and Nautilus, Inc. (NLS) to rally in price in the coming months.

Peloton Interactive, Inc. (PTON)

New York City-based PTON is a leading provider of interactive fitness platforms in North America and internationally. The company’s segments include Connected Fitness Products, and Subscription. It provides technology-enabled fitness and the streaming of instructor-led live or on-demand classes to its customers under Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+.

In its fiscal year 2022 first quarter, ended Sept. 30, 2021, PTON’s total revenues increased 6.24% year-over-year to $805.20 million. Its subscription gross profit increased 121% year-over-year to $202.70 million in the first fiscal quarter.

The $1.15 billion consensus revenue estimate for the second quarter of its fiscal 2022 ended Dec. 31, 2021, represents 8.1% year-over-year growth.

PTON gained 24.9% in price intraday to close Friday’s trading session at $24.60.

Of 22 Wall Street analysts that rated PTON, 11 rated it Buy, nine rated it Hold, while two rated it Sell. The 12-month median price target of $42.28 indicates a 71.9% potential upside. The price targets range from a low of $30.00 to a high of $70.00.

Life Time Group Holdings, Inc. (LTH)

LTH is a holding company for lifestyle brands. The Chanhassen, Minn., company offers health, fitness, and wellness experiences in the U.S. and Canada. LTH is primarily engaged in designing and operating multi-use sports and athletic, professional fitness, family recreation, and spa centers, mostly in residential locations of metropolitan areas. It has some  155 centers in 29 states and one in Canada.

Last week, LTH opened its first downtown Chicago Athletic Resort, Life Time River North. LTH’s memberships start at $249 per month for adults with the ability to add additional members and have one-day memberships. The company is expected to grow its presence in urban markets with this expansion. LTH might expand its customer reach and boost its margins with Time River North.

In January, LTH launched Ringside and Warrior Sculpt classes exclusively for kids aged 5 to 13. The kid-friendly classes are modified versions of LTH’s popular signature adult studio programs led by highly certified instructors. Through these new Kids Studio classes, LTH is expected to grow its offerings for the youngest members and boost the company’s revenues.

In its fiscal year 2021 third quarter, ended September 30, LTH’s total revenue increased 66.7% year-over-year to $385.04 million. Its adjusted EBITDA increased 478.2% year-over-year to $47.03 million in its third fiscal quarter. The company’s cash and cash equivalents increased 35% over the nine months ended Sept. 30, 2021, to come in at $44.83 million. LTH’s total assets grew 2.3% marginally over the nine months to $6.16 billion.

The $1.94 billion consensus revenue estimate for its fiscal year 2022 represents 47.3% year-over-year growth from the last year of 2021. Analysts expect LTH’s EPS for fiscal 2022 to come in at $0.1, representing a 104.9% rise year-over-year.

The stock gained 1.8% in price intraday and closed the last trading session at $14.61. The 12-month price target of $23.00 indicates a 57.4% potential upside.

Nautilus, Inc. (NLS)

NLS in Vancouver, Wash., is a leading fitness solutions company. It designs, develops, and markets cardio and strength fitness products, related accessories, and digital platforms for consumer and commercial use in the U.S., Canada, and internationally. The company operates through two segments: Direct; and Retail. Its products and services portfolio includes specialized cardio, bike, treadmills, home gyms, dumbbells, kettlebells, and more.

Last November, NLS announced new Bowflex SelectTech strength workouts on the JRNY digital fitness platform to customers worldwide. The company also offered a one-year complimentary membership for new JRNY customers. The launch of workouts on the digital platform and one-year free trial membership for a limited period is expected to increase its customer base by gaining new customers and boost its sales and revenue streams.

NLS’ sales from strength products increased 89.8% year-over-year to $40.3 million in its fiscal second quarter of 2022 ended Sept. 30, 2021. NLS’ retail sales grew 6.4% year-over-year to $99.15 million. And its total assets increased 10.4% over the nine months ended Sept. 30, 2021, to $391.03 million.

The stock gained in price 5.4% intraday to close the last trading session at $4.67.

Of the four Wall Street analysts that rated NLS, two rated it Buy, while two rated it Hold. The 12-month median price target of $12.00 indicates a 157% potential upside. The price targets range from a low of $8.00 to a high of $16.00.

PTON shares were trading at $30.01 per share on Monday morning, up $5.41 (+21.99%). Year-to-date, PTON has declined -16.08%, versus a -5.47% rise in the benchmark S&P 500 index during the same period.

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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