Berenberg upgrades The Gym Group to 'buy'
Analysts at Berenberg upgraded their stance on
Berenberg said The Gym Group had "a tough 2023", with a substantially reduced number of site rollouts, fairly underwhelming growth and significant margin deterioration.
"We therefore entered 2024 happy to wait for signs of improvement in the business," said Berenberg.
The German banks stated The Gym Group's recent H1 trading update had left it feeling "encouraged" that the group was in good shape.
Furthermore, Berenberg stated its analysis suggested there was still "significant white space" to grow into, that cost pressures were subsiding and that there was scope for potential shareholder returns as the business continues to generate cash.
"The business is very cash-flow-generative and we estimate cash conversion from EBITDA pre-expansionary capex of 60%. With new sites fully funded through FCF, we estimate leverage will fall to the bottom end of the target range, leaving scope for shareholder returns," it concluded.
Reporting by Iain Gilbert at Sharecast.com
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.