Right now, pickleball is big money, and according to Bank of America (BoA), you'd be smart to invest in more than just a new paddle.

BoA analyst Alexander Perry says the explosive rise of pickleball has positioned Life Time Group Holdings ("Life Time") as a major beneficiary.

With a 56% stock increase this year and an ambitious expansion plan to grow its pickleball courts, Life Time is poised to capitalize on the sport’s booming popularity. Perry reiterated a buy rating for the fitness giant, noting its strategic investments in pickleball are driving membership growth and financial success.

Here's a summary of the key points:

Life Time's Pickleball Strategy

Life Time Group Holdings has positioned itself as the largest provider of indoor pickleball in the United States, capitalizing on the sport's rapid growth. The company has:

Increased its number of pickleball courts by 43% since Q1 2023
Expanded pickleball sessions by 71% in the same period
Installed over 700 permanent pickleball courts across its facilities
Offered pickleball at 75% of its clubs
Plans to expand to 1,000 courts by the end of 2025

Financial Impact and Analyst Outlook

Bank of America analyst Alexander Perry reiterated a buy rating on Life Time stock
Perry raised the price target to $30, implying a potential 27% increase
Life Time's stock has already advanced more than 56% this year
The company posted strong Q2 results and raised its financial guidance for the year
Pickleball has contributed up to 7% of Life Time's membership dues

Pickleball's Growth

Total pickleball players in the U.S. increased by 53% to 13.6 million in 2023
The sport continues to be the fastest-growing in the United States

Additional Initiatives

Life Time has invested up to $100 million in pickleball
The company created a stronger and faster ball specifically for pickleball
Life Time hosts professional tournaments for Major League Pickleball and the Professional Pickleball Association

Market Position

Analyst Alexander Perry believes Life Time is best positioned among leisure companies to benefit from pickleball's popularity, citing strong membership demand and the potential for further price increases.

Pickleball's Impact on Life Time's Revenue

Life Time Group Holdings' investment in pickleball has had a significant positive impact on the company's overall revenue and growth strategy:

Revenue Impact

Pickleball has contributed between 6-7% of Life Time's total membership dues
As of Q2 2024, the company's revenue grew by 17.97% over the last twelve months, demonstrating its ability to increase earnings

Expansion of Pickleball Offerings

Life Time has increased its number of pickleball courts by 43% since Q1 2023
Pickleball sessions have grown by 71% in the same period
The company currently offers pickleball at 75% of its clubs (131 locations)
Life Time plans to expand from over 700 permanent pickleball courts to 1,000 courts by the end of 2025

Membership Growth

Approximately 26% of Life Time's clubs operate with waitlists due to membership demand exceeding capacity
This high demand allows the company to potentially increase membership prices further

By leveraging the pickleball trend, Life Time has not only boosted its direct revenue from the sport but also increased overall membership attraction and retention, contributing to its broader financial growth and market position in the fitness industry.