Telsey says Lululemon partnership positive for Peloton, acquisition unlikely

Telsey Advisory analyst Dana Telsey believes Peloton (PTON) and Lululemon’s (LULU) five-year global partnership is incrementally positive for the former, given Lululemon’s brand strength, and views it as a vote of confidence in the quality of Peloton’s content. However, the near-term financial benefit for Peloton seems modest and will largely center around revenue-sharing of the Lululemon Studio All-Access membership fee, the firm adds. Over time, other benefits include referrals from Lululemon for Peloton’s digital app memberships and a higher share of revenues at Peloton from apparel, which currently is a small percentage of the business. From Lululemon’s side, the company stands to benefit from exposure to the Peloton fitness community that can drive new guest acquisition along with costs savings associated with Peloton now serving as its digital content creator, Telsey says. The firm does not foresee Lululemon acquiring Peloton in the future given the failed acquisition of Mirror. Telsey has a Market Perform on Peloton with a price target of $6.