Buy this gym stock because of popular pickleball, says Bank of America

The explosive rise of pickleball has at least one major beneficiary: Life Time Group Holdings . According to Bank of America analyst Alexander Perry, the upscale fitness and lifestyle company is set to reap the rewards of the continued surge in popularity of pickleball , a sport which exploded during the Covid lockdown and has continued to attract more players at all levels ever since. Perry reiterated his buy rating on Life Time on Friday, raising his price target by $1 to $30, which implies shares could jump 27% from the last close. The stock has advanced more than 56% this year, with investor optimism jumping this quarter as Life Time posted strong second-quarter results on Aug. 1 and raised its financial guidance for the entire year. “We believe LTH, the largest provider of pickleball in the U.S., is best positioned in our leisure coverage to take advantage of the significant rise in popularity of the sport, which continues to be fastest growing in the U.S.,” Perry said in a Friday note to clients, noting that total pickleball players in the U.S. increased by 53% to 13.6 million in 2023. Life Time has increased its number of pickleball courts by 43% — and its pickleball sessions by 71% — since the first quarter of 2023, Perry said. Pickleball is a major part of Life Time’s strategy , as the company’s “athletic country clubs” have more than 700 permanent pickleball courts and it currently offers the sport at 75% of its clubs. The company plans to invest further, expanding to 1,000 courts by the end of 2025. “[M]embership demand continues to exceed desired club capacity, which we believe provides LTH with the ability to increase prices further and should help reduce membership churn,” Perry added. Life Time’s CEO and founder Bahram Akradi told CNBC in early August that Life Time has already invested as much as $100 million in pickleball, and that the sport has brought in up to 7% of Life Time’s membership dues. The company has created a stronger and faster ball specifically for pickleball, and also hosts professional tournaments at its clubs for Major League Pickleball and the Professional Pickleball Association.