Exercise maker Peloton (NASDAQ:PTON) enjoyed its rise upward as a function of being in the right business at the right time. But when times changed, Peloton went on as though nothing ever would and suffered accordingly. However, Peloton is back on the rise—up nearly 3% in Wednesday afternoon’s trading—even as analysts take a second look and foresee potential troubles ahead.
Macquarie, via analyst Paul Golding, did not like what he saw at Peloton and weighed in accordingly. Golding dropped the rating from “outperform” to “neutral,” noting that the chances of merger and acquisition activity involving Peloton are likely to be light for the foreseeable future, thanks to a combination of a shaky macroeconomic environment and a set of operational “hiccups” that have held Peloton back for quite some time. Golding noted that “…a turnaround could still happen” but followed that up with the assertion that the sheer volatility around the situation made it tough to project.
It didn’t help matters much that Peloton was facing a recent seat recall. Back in May, Peloton discovered that the seats on its exercise bike were subject to a defect that could cause them to break during use, a point no one ever wants to consider possible when riding on a bicycle, stationary or otherwise. A recent Peloton newsletter pointed out that around 20,000 subscribers put their subscriptions on pause until their new seats arrived. Peloton’s rebranding and expansion efforts aren’t exactly bearing fruit, either; its recent earnings report was laden with disappointments.
Analysts, meanwhile, are taking the wait-and-see approach to Peloton stock, as gauged by the five Buy ratings, 11 Holds, and one Sell, adding up to a Hold consensus for Peloton stock. Further, with an average price target of $7.75, Peloton stock offers investors 23.6% upside potential.