tiprankstipranks
Is Peloton Stock a Buy Right Now? This Is What You Need to Know
Stock Analysis & Ideas

Is Peloton Stock a Buy Right Now? This Is What You Need to Know

There’s plenty of “wheels coming off the bike” cheap gags to be made about Peloton (PTON) right now.

Shares have been on the backfoot for most of the year and investors felt there was not much to cheer about following the connected-fitness company’s F4Q21 (June quarter) results. In the subsequent session, the stock shed 8% of its value.

It wasn’t all bad, however. In fact, Peloton posted a beat on the top-line, with revenue increasing 54.3% year-over-year to $936.9 million, coming in ahead of the consensus estimate by $8.34 million. Connected fitness subscriptions increased by 114% from the same period last year to more than 2.33 million, while paid digital subscriptions rose by 176% to over 874,000. That said, EPS of -$1.05 missed big time – by $0.58.

Adding more ammunition for the bears, the soft bottom-line result was accompanied by a disappointing outlook. In F1Q22, the company is expecting to generate revenue of $800 million, below the Street’s forecast of $996.49 million.

Peloton is also being investigated by the Securities and Exchange Commission and documents have been subpoenaed by the Department of Justice and the Department of Homeland Security regarding the information given following one child’s death and several injuries linked to its Tread+ exercise machine. The company recalled both of its Tread models back in May, and has just announced that a new version of the Tread will begin selling in the U.S., Canada, and U.K. on August 30, with a German release to follow in the fall.

Another talking point on Wall Street concerns the new price for the Peloton Bike, which is being cut by $400 to $1,495. Does this move indicate strength or weakness?

Needham’s Bernie McTernan thinks it is a display of the former.

“We believe it is the company playing offense, given the strides they have made in reducing the price of the Bike, which allows them to continue to focus on affordability in order to increase the TAM of their low churn, high margin subscription service,” the analyst said.

McTernan remains in PTON’s corner and maintains a Buy rating. However, there’s a slight change to the price target, which is reduced from $135 to $130, although the figure still implies upside of 28% from current levels. (To watch McTernan’s track record, click here)

The Street’s average target is a touch higher, and at $131.55, is set to generate returns of 27% in the year ahead. This stock still gets a lot of support from the analyst community; based on 17 Buys vs. 4 Holds and 1 Sell, PTON has a Moderate Buy consensus rating. (See PTON stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles