Gym Group PLC (LSE:GYM) has retained its place as one of Deutsche Bank’s preferred stocks in the leisure sector, with the broker pointing to powerful demographic and health trends as long-term growth catalysts.
Analyst Tim Barrett reiterated a buy recommendation on the budget gym operator, maintaining a target price of 230p against a recent closing price of 207p.
Barrett argued that Gym Group is particularly well positioned to benefit from younger consumers’ intensifying focus on fitness and overall wellbeing.
Approximately 44% of Gym Group’s membership base falls within the Gen Z cohort, broadly covering those aged 18 to 34, a group the broker views as especially health-conscious.
Deutsche Bank believes this generation places a greater emphasis on health, appearance, and physical fitness than previous generations, creating a structurally supportive customer base for the operator.
The bank also highlighted the rapid adoption of GLP-1 weight-loss drugs as a potential tailwind for the broader gym industry, rather than a threat to it.
Some investors have raised concerns that treatments such as Wegovy and Mounjaro could erode demand for gyms if users rely on medication alone to manage their weight.
However, Deutsche Bank pointed to survey data showing that around 60% of GLP-1 users believe it is important to increase their exercise levels while taking the medication.
The broker said Gym Group’s low-cost model was well suited to attracting value-conscious consumers seeking flexible and affordable fitness options in an uncertain economic climate.
Deutsche Bank described the company as one of its top picks in the mid-cap leisure sector, stating that structural growth drivers remained firmly in place despite broader macroeconomic headwinds.
The bank’s latest research drew on a fitness sector survey as well as observations gathered during a recent visit to one of Gym Group’s London sites.
The combination of a loyal Gen Z membership base and shifting health behaviours among GLP-1 drug users appears to give Deutsche Bank confidence that Gym Group’s growth story remains intact well into the coming years.
