Life Time Group Holdings, Inc.
LTH
$40.75
-0.29%
Life Time Group Holdings, Inc. is a lifestyle and leisure brand that designs, builds, and operates large, resort-style athletic country clubs offering fitness, family recreation, spa, and wellness services across the United States and Canada. Unlike traditional gym operators, Life Time positions itself as a premium, membership-driven destination with a differentiated real estate footprint in affluent metropolitan residential areas, giving it a distinct competitive identity in the Consumer Cyclical leisure space. The current investor narrative centers on a powerful earnings inflection: net income has surged sequentially through 2025, with Q4 2025 net income of $123 million versus $37 million a year earlier, and revenue growth of 12.3% year-over-year. Management's focus on deleveraging, membership pricing power, and disciplined new-club openings has shifted the story from a post-IPO cash-burn concern to a margin-expansion and free-cash-flow recovery thesis, drawing strong analyst conviction despite a recent pullback in the share price.…
LTH
Life Time Group Holdings, Inc.
$40.75
Investment Opinion: Should I buy LTH Today?
The synthesized recommendation is Buy, anchored by a strong_buy analyst consensus (mean 1.14 from 14 analysts) and an average target price of $56.07, implying 37.6% upside from $40.75. The core thesis is that Life Time is undergoing a sustainable earnings inflection—Q4 2025 net income of $123.0 million versus $37.2 million a year ago—that is not yet reflected in its depressed valuation multiples. The recent 8.7% one-month pullback offers an attractive entry point for investors willing to tolerate high volatility.
Supporting evidence is compelling: revenue grew 12.3% year-over-year to $745.1 million, with membership dues (71.8% of revenue) providing recurring visibility. Profitability is expanding rapidly, with net margin at 16.5% in Q4 2025 (up from 5.6%) and EBITDA margin at 35.7% (up from 23.6%). The trailing PE of 15.54x is well below the stock's historical 30x+ range, and the PS ratio of 1.93x is near the bottom of its historical band, while the PEG ratio of 0.127 suggests the stock is cheap relative to growth. Analyst targets range from $50.00 to $64.00, with even the low end implying 22.7% upside, and recent upgrades from Morgan Stanley (Overweight) reinforce institutional conviction.
The biggest risks that could invalidate the thesis are: (1) a consumer recession that slows membership growth and pricing power, (2) failure to deleverage or generate positive free cash flow, and (3) a breakdown below the $40 support level that triggers a deeper correction. The rating would upgrade to a stronger Buy if free cash flow turns sustainably positive or if the stock breaks above $47.235 (52-week high). It would downgrade to Hold if revenue growth decelerates below 8% or if EBITDA margin contracts below 30%. Relative to its history and peers, LTH appears undervalued, trading at a significant discount to premium leisure peers on PS and near the low end of its own valuation range.
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LTH 12-Month Price Forecast
The forward-looking view is bullish, supported by a powerful earnings inflection, expanding margins, and a strong analyst consensus that sees significant upside. The valuation is undemanding relative to history and peers, and the recurring membership revenue base provides visibility. However, the high beta (1.481), negative free cash flow, and elevated leverage introduce meaningful risk, particularly if consumer spending weakens. I would upgrade to high confidence if free cash flow turns sustainably positive and the stock breaks above $47.235, and downgrade to neutral if revenue growth falls below 8% or EBITDA margin contracts below 30%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Life Time Group Holdings, Inc.'s 12-month outlook, with a consensus price target around $56.07 and implied upside of +37.6% versus the current price.
Average Target
$56.07
0 analysts
Implied Upside
+37.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$50 - $64
Analyst target range
Coverage is robust with 14 analysts, and sentiment is overwhelmingly bullish: the consensus recommendation is "strong_buy" with a recommendation mean of 1.14 (where 1.0 is a strong buy). The average price target of $56.07 implies approximately 37.6% upside from the current price of $40.75, a substantial gap that signals analysts see the recent pullback as a buying opportunity rather than a deterioration in fundamentals. The consensus clearly leans bullish, and the magnitude of implied upside suggests the market is significantly undervaluing the stock relative to sell-side expectations.
The target range spans from a low of $50.00 to a high of $64.00, a spread of $14.00, or roughly 28% of the low target. The high target of $64.00 implies roughly 57% upside and likely assumes continued margin expansion, successful deleveraging, accelerating membership growth, and multiple re-rating toward premium leisure peers. The low target of $50.00 still implies 22.7% upside, suggesting even the most conservative analysts see meaningful value, with downside scenarios likely pricing in slower club openings, margin compression, or macro-driven membership attrition. Institutional ratings show a constructive pattern: Morgan Stanley upgraded from Equal Weight to Overweight in October 2025 and reiterated Overweight in February 2026, while Guggenheim has maintained Buy ratings, indicating recent positive estimate revisions and growing institutional conviction. The relatively tight clustering of targets above the current price, combined with the strong_buy consensus, signals high conviction that the recent 8.7% one-month decline is a temporary dislocation rather than a trend reversal.
Bulls vs Bears: LTH Investment Factors
The bull case rests on a powerful earnings inflection, with net income up 3.3x year-over-year in Q4 2025 and EBITDA margins expanding 12.1 percentage points, supported by a strong_buy consensus and 37.6% average analyst upside. The bear case centers on negative free cash flow, elevated leverage (D/E 2.16x), and a recent momentum breakdown (-8.7% in one month) that could signal a deeper correction. Currently, the bull evidence is stronger: the fundamental improvement is quantifiable and recent, analyst conviction is high, and valuation multiples are near historical lows. The single most important tension is whether the margin expansion and deleveraging trajectory can be sustained while funding aggressive club expansion, as any slowdown in membership growth or pricing power would quickly expose the leveraged balance sheet and negative FCF.
Bullish
- Earnings inflection with margin expansion: Q4 2025 net income surged to $123.0 million (16.5% net margin) from $37.2 million (5.6% margin) a year earlier, while EBITDA margin expanded from 23.6% to 35.7%. This demonstrates powerful operating leverage as membership pricing and cost discipline flow to the bottom line.
- Strong analyst consensus and upside: 14 analysts rate LTH a 'strong_buy' with a mean recommendation of 1.14 and an average target price of $56.07, implying 37.6% upside from $40.75. Even the lowest target of $50.00 implies 22.7% upside, indicating high conviction that the recent pullback is a buying opportunity.
- Attractive valuation relative to history and peers: The trailing PE of 15.54x is well below its historical 30x+ levels, and the PS ratio of 1.93x is near the bottom of its historical band (previously above 8x). With a PEG ratio of 0.127, the stock appears cheap relative to its growth rate.
- Recurring membership revenue base: Membership dues of $535.1 million represent 71.8% of Q4 2025 revenue, providing subscription-like visibility and reducing dependence on discretionary in-center spending. Total revenue grew 12.3% year-over-year to $745.1 million.
Bearish
- Negative free cash flow and high capex: Free cash flow TTM is -$20.96 million, weighed down by $304.5 million in Q4 2025 capital expenditures alone. The capital-intensive model requires continuous investment in new clubs, leaving little room for error if membership growth slows.
- Elevated leverage and low current ratio: Debt-to-equity of 2.16x and a current ratio of 0.63 indicate a leveraged balance sheet with limited short-term liquidity. While typical for membership businesses, this amplifies financial risk if EBITDA growth stalls or interest rates remain high.
- Recent momentum breakdown and high volatility: The stock has declined 8.7% over the past month, underperforming SPY by 7.8 percentage points, and is down roughly 11% from its August 2026 high of $45.73. With a beta of 1.481, drawdowns are amplified, and the max drawdown of -16.33% highlights the risk.
- Forward PE exceeds trailing PE: The forward PE of 19.96x is higher than the trailing PE of 15.54x, an unusual inversion that suggests the trailing EPS of $0.064 may be distorted or that consensus forward EPS of $3.18 implies earnings normalization. This discrepancy raises questions about earnings quality and sustainability.
LTH Technical Analysis
Life Time is in a sustained, powerful uptrend, with the stock up 44.2% over the past year and 52.7% year-to-date, dramatically outpacing the S&P 500's 15.0% and 11.7% respective gains. At a current price of $40.75, the stock sits at roughly 73% of its 52-week range (low of $24.14, high of $47.235), positioning it in the upper half of its annual band but not at the extreme highs. This suggests the stock retains momentum without being maximally overextended, though the distance from the 52-week high implies some recent loss of upward thrust. The 1-year relative strength versus SPY of +29.2 percentage points confirms genuine leadership rather than mere beta-driven performance.
Short-term momentum has clearly decelerated and diverged from the longer-term trend. While the stock is up 10.4% over three months and 57.6% over six months, it has declined 8.7% over the past month, underperforming SPY by 7.8 percentage points in that window. This negative 1-month print against a strongly positive 1-year trend signals a corrective pullback within an uptrend rather than a confirmed reversal, especially since the 3-month change remains positive. The divergence is notable: the stock peaked near $45.73 in late August 2026 and has since drifted lower to $40.75, a roughly 11% retreat from that recent high, suggesting profit-taking after a sharp summer rally rather than a fundamental breakdown.
Key technical levels are well-defined: support rests at the 52-week low of $24.14, with a more immediate psychological and structural support zone around $40, while resistance sits at the 52-week high of $47.235. A breakout above $47.235 would confirm trend continuation and likely open the door to new all-time highs, whereas a breakdown below $40 could expose the stock to a deeper mean-reversion toward the mid-$30s. With a beta of 1.481, the stock is approximately 48% more volatile than the broader market, meaning position sizing should account for amplified drawdowns; the maximum drawdown of -16.33% over the period underscores that this is a high-volatility name requiring disciplined risk management.
Beta
1.48
1.48x market volatility
Max Drawdown
-16.3%
Largest decline past year
52-Week Range
$24-$47
Price range past year
Annual Return
+44.2%
Cumulative gain past year
| Period | LTH Return | S&P 500 |
|---|---|---|
| 1m | -8.7% | -0.5% |
| 3m | +10.4% | +2.3% |
| 6m | +57.6% | +16.6% |
| 1y | +44.2% | +14.8% |
| ytd | +52.7% | +11.7% |
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LTH Fundamental Analysis
Life Time's revenue trajectory is clearly one of healthy, consistent growth. Q4 2025 revenue reached $745.1 million, up 12.3% year-over-year from $663.3 million in Q4 2024, and the multi-quarter trend shows steady expansion: $706.0 million in Q1 2025, $761.5 million in Q2, $782.6 million in Q3, and $745.1 million in Q4 (the Q4 dip is seasonal). The membership segment is the dominant growth engine at $535.1 million, dwarfing in-center revenue of $191.2 million and product/service/other at $18.8 million, indicating a recurring, subscription-like revenue base that provides visibility. This growth profile supports the investment case as a scaling, membership-compounding business rather than a cyclical, traffic-dependent operator.
The company is solidly profitable and margins are expanding meaningfully. Q4 2025 net income was $123.0 million with a net margin of 16.5%, up sharply from $37.2 million and a 5.6% net margin in Q4 2024, while the trailing net margin stands at 12.5%. Gross margin of 47.6% and operating margin of 16.1% reflect improving operating leverage, with operating income rising to $129.5 million in Q4 2025 from $87.0 million a year prior. The EBITDA margin trajectory is equally impressive, climbing from 23.6% in Q4 2024 to 35.7% in Q4 2025, demonstrating that membership pricing power and cost discipline are flowing directly to the bottom line.
Balance sheet and cash flow metrics reveal a capital-intensive but improving financial position. Debt-to-equity stands at 2.16x, elevated but declining from prior levels, while the current ratio of 0.63 reflects a working-capital structure typical of membership businesses that collect dues upfront. Free cash flow TTM is negative at -$20.96 million, weighed down by heavy capital expenditure of $304.5 million in Q4 2025 alone, though operating cash flow remains robust at $239.9 million for the quarter. ROE of 11.95% and ROA of 4.17% are respectable for a real-estate-heavy operator, and the interest coverage ratio of 7.65x signals that debt servicing is comfortably manageable as EBITDA grows.
Quarterly Revenue
$745096000.0B
2025-12
Revenue YoY Growth
+12.3%
YoY Comparison
Gross Margin
N/A
Latest Quarter
Free Cash Flow
$-20958000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is LTH Overvalued?
Because Life Time is profitable with positive trailing net income, the PE ratio is the appropriate primary metric. The stock trades at a trailing PE of 15.54x and a forward PE of 19.96x, an unusual inversion where the forward multiple exceeds the trailing multiple, implying the market expects either earnings normalization or that the trailing figure is flattered by one-time items; more likely, the forward estimate reflects conservative consensus EPS of $3.18 versus a trailing EPS of $0.064, a discrepancy that suggests the trailing EPS figure may be distorted by share-count or reporting conventions. The PEG ratio of 0.127 is exceptionally low, implying the stock is cheap relative to its growth rate if that growth is sustainable.
Relative to sector norms, Life Time screens as a value proposition. With a PS ratio of 1.93x, a PB ratio of 1.85x, and an EV/EBITDA of 15.59x, the stock trades at a discount to many premium consumer-leisure peers that command PS multiples above 3x. The EV/Sales of 4.14x reflects the company's substantial debt load, which inflates enterprise value relative to equity. The discount appears partially justified by the leveraged balance sheet (debt-to-equity of 2.16x) and negative trailing free cash flow, but the improving margin and EBITDA profile suggests the market may be underappreciating the deleveraging and cash-generation inflection.
Historically, Life Time's valuation has compressed dramatically from its post-IPO levels. The PE ratio has fallen from over 30x in 2023 and 2024 to 15.54x currently, while the PS ratio has declined from above 8x in mid-2025 to 1.93x today, placing the stock near the bottom of its own historical valuation band. This compression occurred alongside a 44% one-year price gain, meaning earnings growth has outpaced price appreciation, a classic sign of multiple compression that can precede re-rating. The PB ratio of 1.85x is near the lower end of its historical range (which has spanned roughly 0.9x to 2.5x), suggesting the market is pricing in modest expectations despite the fundamental improvement.
PE
15.5x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 12x~42x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.6x
Enterprise Value Multiple
Investment Risk Disclosure
Life Time's financial risk profile is dominated by its capital-intensive, leveraged model. Debt-to-equity stands at 2.16x, and the current ratio of 0.63 indicates limited short-term liquidity, though this is partly structural as membership dues are collected upfront. Free cash flow TTM is negative at -$20.96 million, with Q4 2025 capex alone reaching $304.5 million, meaning the company depends on continued EBITDA growth to service $16.9 million in quarterly interest expense. While interest coverage of 7.65x is currently comfortable, any decline in operating income would rapidly erode this cushion and pressure the equity. Additionally, revenue concentration in membership dues (71.8% of Q4 revenue) ties performance to retention and pricing power, leaving little diversification if consumer discretionary spending weakens.
Market and competitive risks are amplified by the stock's high beta of 1.481, making it roughly 48% more volatile than the broader market. The recent 8.7% one-month decline, underperforming SPY by 7.8 percentage points, illustrates how quickly sentiment can shift. Valuation risk is twofold: while the trailing PE of 15.54x appears low, the forward PE of 19.96x suggests the market may be pricing in earnings normalization, and the EV/EBITDA of 15.59x is not cheap for a leveraged operator. Competition from boutique fitness studios, digital fitness platforms, and traditional gyms could pressure membership growth, while a consumer slowdown in affluent metropolitan areas—Life Time's core demographic—would directly hit sign-ups and in-center spending. Regulatory or labor cost headwinds, though not currently prominent in the news, remain a background risk for large physical operators.
The worst-case scenario would involve a consumer recession that triggers membership attrition and pricing pressure, just as the company is funding an aggressive capex cycle. This would cause EBITDA to contract, interest coverage to fall below 5x, and free cash flow to deteriorate further, potentially forcing a dividend cut (currently zero) or equity dilution. In such a scenario, the stock could retest its 52-week low of $24.14, representing a 40.8% decline from the current price of $40.75. Even a moderate bear case, aligned with the analyst low target of $50.00, implies 22.7% upside, but that assumes no macro deterioration. A more realistic downside, given the high beta and negative FCF, could see the stock fall to the mid-$30s, a loss of roughly 15-20%, if the recent momentum breakdown accelerates and the 200-day moving average fails to hold.
FAQ
The most severe risk is financial: debt-to-equity of 2.16x and negative free cash flow of -$20.96 million TTM, with Q4 2025 capex of $304.5 million, leaving little margin for error if EBITDA declines. Second is consumer cyclicality: 71.8% of revenue comes from membership dues, and a recession could cause attrition and pricing pressure, directly hitting margins. Third is market/technical risk: the stock has a beta of 1.481 and recently fell 8.7% in one month, underperforming SPY by 7.8 percentage points; a breakdown below $40 could trigger a deeper correction toward the 52-week low of $24.14. Fourth is competitive risk from boutique fitness and digital platforms, which could erode Life Time's premium positioning and membership growth.
The 12-month forecast is based on three scenarios: bull case (30% probability) targets $56-$64, assuming continued margin expansion and multiple re-rating; base case (50% probability) targets $48-$56, assuming steady execution with revenue growth of 10-12% and EBITDA margin around 33-35%; bear case (20% probability) targets $24-$35, assuming a consumer recession and membership attrition. The most likely scenario is the base case, with a target of $56.07 (analyst average), implying 37.6% upside. The key assumption is that revenue growth remains above 10% and EBITDA margin holds above 33%, allowing the company to gradually deleverage and approach free cash flow breakeven.
LTH appears undervalued relative to its history and peers. The trailing PE of 15.54x is well below its historical 30x+ levels, and the PS ratio of 1.93x is near the bottom of its historical band (previously above 8x). The PEG ratio of 0.127 suggests the stock is cheap relative to its growth rate, and the EV/EBITDA of 15.59x is reasonable for a company with expanding margins. Compared to premium leisure peers that often trade above 3x PS, LTH's 1.93x PS represents a discount. The market appears to be pricing in modest expectations, likely due to the leveraged balance sheet and negative free cash flow, but if the company continues to deleverage and generate positive FCF, the multiple could re-rate higher.
From a risk/reward perspective, LTH offers a compelling opportunity for investors who can tolerate high volatility. The stock trades at $40.75, with a strong_buy analyst consensus and an average target of $56.07, implying 37.6% upside. The fundamental inflection is real: Q4 2025 net income of $123.0 million versus $37.2 million a year ago, with EBITDA margin expanding to 35.7%. However, the biggest downside risk is a consumer recession that could pressure membership growth and expose the leveraged balance sheet (D/E 2.16x) and negative free cash flow (-$20.96 million TTM). It is a good buy for growth-oriented investors with a 12-18 month horizon, but position sizing should account for the 1.481 beta and potential 40% drawdown to the 52-week low of $24.14.
LTH is more suitable for a medium-to-long-term investment horizon (at least 12-18 months) rather than short-term trading. The company is in a growth phase with a capital-intensive model, and its earnings inflection and deleveraging story will take several quarters to fully play out. The high beta of 1.481 and recent 8.7% one-month decline make it risky for short-term traders, who could be whipsawed by volatility. There is no dividend (payout ratio 0%), so returns depend entirely on capital appreciation. A minimum holding period of 12 months is suggested to allow for margin expansion, free cash flow improvement, and potential multiple re-rating toward the analyst target of $56.07.