Broker tips: Gym Group, IG Group
By Iain Gilbert
Date: Friday 14 Aug 2026
(Sharecast News) - Analysts at Berenberg hiked their target price for The Gym Group from 255p to 295p on Friday, saying the low‑cost operator offered a multi‑year growth story in an underpenetrated market and remains attractively valued.
Berenberg kept its 'buy' rating on the stock, arguing the market continues to underestimate the company's position and long‑term free‑cash‑flow potential, and highlighted that low‑cost gyms currently account for 4.7% of the UK population, with analysis suggesting a 10-20 year runway for new openings as penetration moves towards 8% and potentially higher, in line with levels seen in Scandinavia and the US.
It also noted The Gym Group generated £38m of free cash flow before growth capex in FY25 and could produce more than £164m annually at maturity.
The German bank said demand drivers remain supportive, with the chain heavily indexed to Gen Z and Gen Alpha - demographics that prioritise health and fitness and tend to be influenced by social media and strength‑training trends.
Costs have been well managed, though Berenberg said it remains cautious given ongoing inflation. It expects margins to be slightly lower year‑on‑year but sees scope for up to 28% underlying earnings‑less‑normalised‑rent margins in a more optimistic scenario, which could drive 6% to 22% upgrades to consensus. Key KPIs also screened positively, with revenue per member and average revenue per gym improving.
Berenberg added that its blended discounted cashflow approach supported its new 295p target price, noting valuation multiples remain below historical levels and peer benchmarks.
RBC Capital Markets reiterated its 'outperform' rating on IG Group on Friday as it argued the stock was oversold on news of the acquisition of US prediction markets operator Underdog.
The Canadian bank, which maintained its 1,850p price target, noted that IG's value has fallen by more than the deal consideration, with the shares down 22% since the announcement and market cap reduced by around £1.2bn, suggesting there was nothing in the market cap for the Underdog business.
"Whilst the deal increases leverage, pauses buybacks and introduces near-term regulatory uncertainty, we believe several positives have been overlooked: diversification away from market volatility, exposure to high-growth prediction markets and improved long-term listing optionality," RBC said.
"Whilst the range of EPS outcomes has widened in both directions across our forecast period, in our view the market has priced in only the downside. With IGG now trading on 10x we see a clear valuation case and expect the shares to benefit from the broadening in appeal that the deal creates."
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