Planet Health stumbles as Wall Avenue ponders its CEO’s shock departure

Planet Fitness stumbles as Wall Street ponders its CEO's surprise departure

(Bloomberg) — Planet Health Inc. has sunk. After the corporate introduced the speedy resignation of its CEO, Chris Rondo, who held this place for greater than a decade.

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Shares fell 16% on Friday to shut at about $50 per share, the bottom stage since 2020. The corporate stated Rondo will stay a member of the board and shall be nominated for re-election in 2024. Planet Health additionally named board member Craig R. Benson. appointed its interim CEO and started a seek for a everlasting chief.

This modification stunned analysts, prompting considered one of them to decrease his suggestion on the inventory. Wall Avenue is mostly bullish on the corporate, with greater than 80% of these protecting Planet Health giving it a ranking equal to purchase and the common value goal seeing an upside of about 50% for shares, in line with knowledge compiled by Bloomberg.

Quinn downgraded Planet Health to market carry out from outperform and lower its value goal to $55 from $72, saying shares of the health trade chief are more likely to stay beneath strain till the corporate hires a brand new CEO and updates its progress technique.

“The departure will increase uncertainty in regards to the franchise’s well being, openness outlook, and aggressive place,” analysts led by Max Rakhlenko wrote.

Baird analysts led by Jonathan Coombe lower their value goal on shares to $65 from $87, however maintained their outperform ranking.

“We’re stunned by at the moment’s announcement, however we will additionally see the rationale for the board to opportunistically transition to a extra skilled CEO as PLNT addresses near-term challenges with decrease unit economics,” Coombe wrote in a notice. “We consider the board has made a troublesome change following latest poor efficiency; this transfer raises a number of near-term uncertainties, though in our view it isn’t sufficient to dismiss PLNT’s enticing valuation.

Planet Health shares are down 36% in 2023.

Stifel analysts agree that new management could possibly be a chance for Planet Health to develop.

“Though the timing of the announcement was stunning, we consider the management transition might pave the best way for a quicker tempo of change, with sure components of the mannequin – reminiscent of elevating the worth of the Basic membership bundle – probably now on the desk,” analysts led by Chris Okall wrote. .

Learn extra: Planet Health declines as 2023 growth plan worries buyers

Analysts at DA Davidson, who even have a Impartial ranking on the inventory, see the corporate slicing targets going ahead.

“PLNT has already stated it’s reassessing its opening targets for multi-year items, and we extensively consider it should decrease the targets set out at its analyst assembly on November 15, 2022,” analysts led by Linda Bolton Weiser wrote in a notice.

Priced at $66, Weiser added that the corporate “supplied a number of explanation why franchise unit openings have been gradual, with out giving buyers confidence in regards to the potential progress charge, which we consider was the primary issue that influenced the inventory’s efficiency.” Goal the arrows.

Nonetheless, others stay constructive on the health chain.

“Though the management transition is regarding, we proceed to consider Planet is able to wholesome EPS progress even in a slower enlargement state of affairs given its distinctive value-oriented, high-volume mannequin and reiterate our Outperform ranking,” wrote Sharon Zakvia, William analyst. Blair, in P.S.

-With help from Katerina Comboli.

(Updates inventory actions at market shut. Earlier replace added Quinn’s remark)

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