Evercore ISI initiated coverage on Planet Fitness (NYSE:PLNT) with an Outperform rating on its view that the market is not giving the gym club stock credit for the post-COVID demand re-rate.

“We think Planet Fitness’ demand is still 15% depressed (back at prepandemic levels… but still way below trend), and see 25% upside to 2023 EPS estimates as gym demand fully normalizes by 2023… We conclude that ~2.0-2.5mm members are likely sitting on the sidelines… and ready to fuel a period of elevated joins over the next 12-18 months as gym demand (likely one of the last behaviors to recover) fully normalizes.”

On Planet Fitness (PLNT) valuation, analyst Warren Cheng and team noted shares trade at a premium to the restaurant franchisor group, but see an analogy with other high quality, high-moat, high-market share, secularly strong continuous compounders that have ended up justifying their high multiples.

The firm assigned a price target of $130 to Planet Fitness (PLNT) vs. the average analyst price target of $103.93.