Morgan Stanley buyers of Planet Fitness at current levels

Morgan Stanley analyst Megan Alexander notes Planet Fitness (PLNT) shares closed down 5% on March 19 and are down 11% over the past week, which the firm believes is driven by concerns over reported calls for boycotts on social media related to a recent locker room incident at one of the company’s locations. While acknowledging that the potential impact to Planet’s cancellation rates and membership is “top of mind for investors,” the firm, using Target (TGT) as a proxy, estimates a potential 7% impact to FY24 EBITDA and about a 12% headwind to EPS. While adding that it does not want to “understate the short-term impacts these events could have not just on business results but also sentiment,” the firm maintains an Overweight rating and $79 price target on shares and would be buyers on weakness.