Peloton Interactive (PTON) announced on Wednesday that its home-fitness cycling app has launched on TV streaming platform Roku (ROKU) sending shares up more than 3%.
The stock rose 3.6% to $59.86 in early afternoon trading. Roku shares jumped 6% to $123.57.
Starting today, Roku users in the U.S. can add the Peloton channel via the Roku channel store to do studio-style workouts in their homes also without a Peloton bike or tread.
The announcement comes as Roku reported that health & fitness programs in the U.S. have experienced the largest growth in streaming on its devices growing by more than 130% in May year-over-year.
“As people continue to stay home, the television is increasingly becoming their window to the world, providing virtual access to the gym, travel, food, learning, and more,” said Regina Breslin, Director of Content Acquisition at Roku. “Consumer appetite for compelling content has never been stronger.”
Initially Peloton is offering a 30-day free trial for new users. Following the trial period, the app-only Peloton digital membership will be $12.99/month.
Peloton shares have more than doubled this year as stay-at-home orders tied to the coronavirus pandemic left fitness clubs closed boosting demand for its exercise bikes and leading to a surge in digital fitness subscriptions.
Despite the recent rally, five-star analyst Laura Martin at Needham last week raised the price target to $65 (8.3% upside potential) from $50 and assigned a Buy rating, saying that the stock is “COVID-defensive”.
“With uncertainty in every dimension in 360 degrees caused by COVID-19, we think PTON is a great place for investors to hide,” Martin wrote in a note to investors.
Martin added that she expects strong demand for Peloton bikes indefinitely because its wealthy target market will remain hesitant to return to public gyms for years and many large residential buildings in cities have closed their in-building gyms.
Overall, Wall Street analysts share Martin’s bullish outlook on the stock. The Strong Buy consensus is based on 20 Buys versus 1 Hold and 1 Sell. However, the $55.14 average price target now indicates 8.1% downside potential in the shares in the coming 12 months. (Peloton stock analysis on TipRanks).
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