Throughout 2020, several stocks and industries saw their valuations soar due to mobility restrictions and increased ecommerce activity. One of those companies is Peloton Interactive, Inc. (PTON), which saw its share price climb tremendously as investors poured into the at-home exercise equipment stock. Now, as economies have largely reopened, PTON is facing multiple quarters of difficult earnings comparisons, as well as supply-side drags and inflationary impacts. (See Analysts’ Top Stocks on TipRanks)
Describing the difficult short-term scenario is Scott Devitt of Stifel Nicolaus, who wrote that forecasts for the upcoming year remain cloudy, due in part to “normalizing consumer behavior, supply chain constraints, and the uncertain launch of Tread.” Tread is Peloton’s new Treadmill product offering.
While Devitt is neutral on the near-term outlook, he still believes the company is well-poised for increased market share.
Devitt rated the stock a Hold, and assigned a price target of $56.
The company recently raised capital though a public offering of 23.91 million shares of stock at $46 per share. This produced proceeds of about $1.2 billion, which is expected to be put toward mergers and acquisitions, innovation in technology and its pipeline, and manufacturing costs. Last May, Peloton announced the plans to build its first U.S. manufacturing plant in Ohio, called the Peloton Output Park.
Despite the long-term upsides, Devitt remained cautious on PTON. He anticipates its Q4 revenue to meet only the low end of management’s guidance, and is waiting until PTON’s trends stabilize before entering into the stock.
The five-star analyst is uncertain about the broader economic macroenvironment which heavily affects PTON’s stock, although at the moment it appears that the new Omicron variant of COVID-19 is inducing renewed lockdowns in some areas.
Using TipRanks website traffic tools, which is based on data supplied by SEMrush (SEMR), PTON’s outlook for the upcoming quarter is in agreement with Devitt’s arguments. Quarter-over-quarter, total device visits to onepeloton.com declined 66.80%, while the stock price fell 48.81% during that same period. However, when comparing the year-to-date range of both 2020 and 2021, total visits are up 47.23%. This shows a persisting relevance for Peloton, despite vaccinations and increased mobility.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.
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