CLUB's Valuation Attractive
Town Sports International Holdings Inc. (
CLUB) is a fitness leader in the markets in which it operates, including the metro areas of New York, Boston, Washington DC, and Philadelphia. We believe that the company's strategy of clustering locations throughout a metro area will continue to generate strong results.
Despite significantly tempered expectations in light of the current recession, we consider the shares of CLUB to be undervalued at current levels. Shares of CLUB are trading at approximately 3.8x our 2009 EBITDA estimate, a multiple which we consider to be excessively low.
Our $5.00 price target on shares of CLUB reflects a multiple of approximately 4.5x our estimated 2009 EBITDA. We consider this multiple to be conservative even in a recessionary environment.
In light of the company's strong position in its markets, we consider the long-term growth potential to remain attractive. CLUB is expected to report Q4 results in late February.
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