Analyst says Life Time membership may be on rise

A UBS analyst said Thursday that Life Time Fitness Inc. may be experiencing stabilizing or improved membership growth despite challenging economic conditions.

Analyst Brian Nagel said the fitness club operator has curbed promotional activity over the past few weeks, which could signal better membership levels.

Analysts have kept a close eye on discretionary spending as consumers have tightened their spending due to the continued housing downturn, escalating food and fuel costs, diminishing credit and recession fears.

"We expect membership growth at Life Time Fitness to improve in the second half of the year as efforts to work down memberships at over-capacity facilities cease and Life Time Fitness begins to expand membership levels at its acquired facilities," Nagel wrote in a client note.

The analyst reiterated a "Buy" rating and $70 price target, suggesting growth of 88 percent over its closing price Wednesday of $37.17.

In afternoon trading, shares of Life Time Fitness added 33 cents to $37.50.