Is Life Time Group Holdings Inc. (LTH) a Good IPO Stock to Buy?

The fitness industry had been hit hard during the pandemic, as gyms were forced to temporarily close all of their locations and reimburse a large chunk of the yearly membership fees they collected. Now…

gyms across the globe are emerging from this period of lockdowns and may be presenting the market with a favorable investment opportunity.

Last week, gym chain LTH Holdings Inc. (LTH) debuted on the NYSE, offering 39 million common shares at $18 per share, raising $702m in the process.

LTH primarily engages in designing, building, and operating multi-use sports and athletic, professional fitness, family recreation, and spa centers in a resort-like environment. With around 700 locations, LA Fitness clubs are usually set in residential locations of most metropolitan areas in the United States and Canada.

The company proposes high-end health and wellness solutions for its customers. It offers fitness centers with equipment, locker rooms, group fitness studios, indoor and outdoor pools, and bistro. Many of these facilities also include indoor and outdoor tennis courts, basketball courts, LifeSpa, LifeCafe, childcare, as well as Kids Academy learning spaces.

Today, I will analyze the LTH’s fundamentals, valuation metrics, and growth prospects to estimate if the fitness chain presents a good investment opportunity after its IPO.

LTH’s financials have slightly rebounded after the opening of its centers, but the company still remains unprofitable

Since it’s listing on Thursday, LTH’s stock has gained 1.9%. This comes as no surprise as the IPO had not been highly anticipated compared to other companies that recently went public. The inability to turn a profit has also led to a lack of excitement surrounding the company’s offering.

LTH’s net sales declined significantly in 2020, down 50.1% to $948.3m, following the Covid-19 lockdowns that negatively impacted most of the company’s recreational centers. In 2021, analysts are expecting a moderate rebound of LTH’s activity, up 8.8% year-on-year to $1.03b. In addition, the cost of revenues is expected to accelerate in the same period, up 6.6% to $703.5m in 2021, weighing on the company’s bottom line.

While the company posted a net loss of $360m in…


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