Life Time Group (LTH) is expected to see accelerating new club growth, which should improve membership trends with sustained pricing, thereby providing upside to consensus estimates on the company, Morgan Stanley said in a Monday note.

Morgan Stanley said Life Time Group has a "significant embedded pricing opportunity" as legacy members currently pay about $30 a month less than new joiners, representing a $20 million a month revenue opportunity.

Life Time Group's Dynamic Personal Training offering is expected to remain a key growth of in-center spending going forward, Morgan Stanley said, adding that it saw additional opportunities from execution improvements at LifeCafes, the company's on-site restaurant, further racket sports expansion, among others.

Morgan Stanley said that if Life Time Group's new club returns come in below expectations or the company faces challenges in managing capital intensity and funding growth, its unit growth assumptions "could prove too optimistic."

Morgan Stanley said it upgraded its rating on the company to overweight from equalweight, and raised its price target to $39 from $34.