Barclays initiates Life Time stock with overweight on wellness trend

Barclays has taken a close look at Life Time Group Holdings Inc and given the stock an "overweight" rating. The investment firm sees potential for the stock to rise over 21%, from its current price of $41.93 to a target of $51.00. Analysts are largely in agreement, with a "strong buy" consensus rating and price targets ranging from $50 to $64.

Life Time sits at the crossroads of two major long-term trends: a growing focus on health and wellness among consumers and the continued strength of the higher-income consumer. Barclays believes the company's unique model of an athletic country club, combined with a long-term strategy to increase premium membership, creates a more stable demand profile than the market currently recognizes. This model supports low-teens EBITDA growth over the coming years.

In the last year, Life Time generated $848 million in EBITDA while seeing revenue growth of nearly 13%. While the company appears slightly overvalued based on InvestingPro analysis, its PEG ratio of 0.29 suggests a reasonable valuation relative to its expected growth. The $51 price target is calculated using a 11.5x EV/EBITDA multiple, which is considered reasonable given Life Time's compelling growth and visibility compared to its peers.

Life Time has shifted its membership base towards more affluent households, with annual dues representing a small household expense compared to private country clubs. This model offers a strong value proposition while maintaining flexibility to adapt to changing wellness trends. The differentiated athletic country club model allows the company to engage, retain members, and maintain pricing power.

Recent strong earnings reports have further bolstered investor confidence. Life Time achieved adjusted earnings of $0.48 per share and revenue of $866 million, both surpassing expectations. UBS raised its price target to $57, citing robust same-store sales growth, while BofA Securities and Guggenheim also increased their price targets to $51 and $50, respectively, highlighting the company's impressive earnings and EBITDA figures.

Additionally, Life Time raised its full-year 2026 guidance for revenue, net income, and adjusted EBITDA, demonstrating confidence in its future performance.