The Gym Group PLC (GB:GYM) today reported higher revenues in its pre-close trading update for 2023, driven by its expanding membership base. The company stated that the “positive trading trends” from the first half persisted throughout the year, leading to substantial growth in both membership and yield.
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The company’s revenue grew 18% to £204 million in 2023. The average revenue per member per month rose 9% to £19.50, with average members up 8% to 872,000.
GYM shares gained 3% in early trading hours and were up 0.95% as of writing. The Gym Group operates a chain of affordable fitness clubs in the UK.
Analysts’ Reactions
Analyst James Wheatcroft from Jefferies expressed his optimism regarding the trading update. He emphasized the positive aspects such as higher average revenue, a reduction in net debt by £10 million, upcoming new gyms funded via free cash flow, and the three-tier pricing policy. He is also confident about the upcoming new-year sign-up period.
Wheatcroft reiterated his Buy rating on the stock today, predicting an upside of 66.6%.
Analysts at brokerage firm Numis think that the update was encouraging and raised their EBITDA estimate by 3.5% to £37.7 million. They added that the company’s revenues showcased good momentum along with stable profits, which paves the way for more centers and a further reduction in debt in FY24.
The company is set to release its complete FY23 results and guidance for FY24 on March 13, 2024.
Is Gym Group a Good Buy?
According to TipRanks consensus, GYM stock has received a Moderate Buy rating based on a Buy recommendation from Wheatcroft. The Gym Group share price target of 180p implies an upside of 66.67% from the current level.
