CLUB Beats 4Q09 Expectations; 1Q10 Guidance Neutral To Slightly Negative
Analysts at KeyBanc Capital Markets reiterate their “buy” rating on Town Sports International Holdings Inc (NASDAQ: CLUB).
Town Sports International reported better-than-expected earnings for 4Q09. “We attribute better than anticipated expense control with delivering the 4Q09 beat on the bottom line,” the analysts say. “CLUB is maintaining the discipline of only issuing earnings guidance for the next quarter. For 1Q10, the Company is forecasting an adjusted loss of $0.03 per share to a loss of $0.06 per share, which is below our expectation of earnings of $0.05 per share and the consensus expectation of a loss of $0.01 per share. This earnings guidance includes an expected revenue range of $117 million-$118 million (vs. $126.7 million in 1Q09). CLUB also plans to invest between $34 million and $37 million in capital expenditures for 2010 (well below the $49.3 million in 2009), which doesn't appear to include any plans for new club openings,” the analysts add.
“Overall, we would characterize this announcement as modestly positive, with the 4Q09 beat as a positive, the 1Q10 guidance as neutral/slightly negative… CLUB indicated that trends appeared to turned the corner at the end of 2009 and this momentum has persisted into 1Q10 - as such, it appears that attrition has peaked. We believe that initiatives targeting operations and member experience should drive membership growth and further additional benefits throughout 2010,” the research note by KeyBanc Capital Markets mentions.
