Life Time Takes It On The Chin Sellers bullied Life Time Fitness on Friday after the cojmpany offered a weak earnings outlook, but this muscle-builder shouldn't be counted out of the fight just yet. It looks like the gym company is rolling with the punches of a punk economy and it should eventually return to form.
Life Time Fitness (nyse: LTM - news - people ) , which is headquartered in Eden Prairie, Minn., expects to bring in earnings of $2.05 to $2.08 per share in 2008. Analysts polled by Thomson Financial had expected $2.18. LIkewise, sales in 2008 are now expected to be between $780 million and $800 million. Wall Street had figured on $806.8 million. Some of the firm's shareholders threw in the towel: the stock fell 17.5%, or $7.10, to $33.50, on Friday.
Greg Gorbatenko, an analyst at Jackson Securities specializing in retail fitness companies, said he doesn't think that the lowered guidance reflects a problem within the company. Gorbatenko said the stock slump is a "bump in the road" reflective of a cool down across the economy. He said that Life Time "brings values to its segment" by bringing better facilities to its "middle-class to upper-middle class suburbia" membership."
Oppenheimer analyst Vivian Ma agreed that the lowered guidance was brought on by an "economy-wide issue." She said that the outlook is still "extremely respectable" and that expected growth is still very high at about 20%. Ma said that the stock is best for long-term investors because Life Time has proven resilience and is successfully attracting more customers that it can accomodate. The over-crowding issue is being addressed by lowered advertising and higher membership fees, which makes the clientele that much more attractive.
Life Time Fitness operates more than 70 gyms and spa centers in 13 U.S. states. Along with its old-fashioned gyms, it also offer high-end fitness centers with "resort-like" settings. In September 2007, the company acquired the White Bear Racquet & Swim club in White Bear Lake, Minn.