Shares of the exercise equipment maker Peloton Interactive (NASDAQ:PTON) closed over 24% lower following the release of Q2 financials. Moreover, its stock is down over 75% in one year. Given the significant decline in its price, Needham analyst Bernie McTernan believes that the negatives are already priced in PTON stock. McTernan reiterated a Hold rating on Peloton stock on February 1.
Speaking to Yahoo Finance, the analyst said he believes that PTON has a strong product base, but it is “not a great stock at this point.” Nevertheless, McTernan believes that most of the bad news has already been taken into account.
The analyst noted that PTON provided lower-than-expected revenue and adjusted EBITDA guidance for Q3. Also, he noted that the company is burning cash on marketing to drive user base. Despite these challenges, PTON has successfully mitigated customer attrition and is transitioning towards a subscription-based model. This is expected to positively impact its adjusted EBITDA in the long run.
Is Peloton a Buy, Sell, or Hold?
Including McTernan, 18 analysts maintained a Hold rating on PTON stock. Meanwhile, four recommended a Buy, and one analyst gave a Sell rating. Overall, Peloton stock has a Hold consensus rating. Analysts’ average price target of $7.51 implies 78.38% upside potential from current levels.
