Berenberg ups Basic Fit to 'hold' as valuation better reflects risks

Basic-Fit

04/11/2022 10:46

** Berenberg upgrades Dutch discount gym chain Basic Fit
 BFIT.AS  to 'hold' from 'sell', saying the current valuation
now better reflects the headwinds the group is facing
        ** Berenberg points to Basic Fit stock underperformance
in recent months on the back of two profit warnings in 
    July
     and 
    October
  
    ** However "Basic Fit is not out of the woods yet and the
environment could prove to be tougher in 2023," the broker says
    ** Among the risks that could impact the group the broker
mentions the residual COVID-19 impact, a slower-than-anticipated
ramp-up in clubs opened during the pandemic and a slower growth
in new joiners
    ** It also points to a possible increase in number of
cancellations and to higher operating cost inflation driven by
salary increase and rising rent and energy prices
    ** "We acknowledge that the level of uptake of the premium
offering and large number of club openings scheduled for Q1 are
positive, but we suspect it will not be enough to fully offset
the potential impact of the headwinds mentioned above," the
broker adds
    ** The stock has dropped by 48% YTD
 (Reporting by Federica Mileo in Gdansk)
 ((Federica.mileo@thomsonreuters.com))