The Numbers Behind Peloton's Strong Quarter

Peloton Interactive Inc PTON seems poised to benefit from a longer-term change in consumer habits, according to BofA Securities.

The Peloton Analyst: Justin Post maintained a Buy rating for Peloton, while raising the price target from $54 to $72.

The Peloton Thesis: Peloton’s app downloads on iOS and Android rose by 343% year-on-year in the fourth quarter of fiscal 2020, versus 134% in the previous quarter, although downloads declined in May and June from April’s levels, Post said in the note.

Peloton’s searches climbed 204% year-on-year in the fiscal fourth quarter, versus 70% in the prior quarter, and remained well ahead of its competitors. Post said monthly total visits to the company’s side were 2.95 million in June, well above the pre-COVID levels and competition, despite the decline from April’s peak levels.

Post raised the revenue and EBITDA estimates for the fiscal fourth quarter from $529 million to $548 million and from $67 million to $76 million, respectively, citing robust demand.

Strong demand is likely to continue into the first quarter of fiscal 2021, the analyst said. He raised the revenue and EBITDA estimates for fiscal 2021 from $2.50 billion to $2.62 billion and from $41 million to $117 million, respectively, on higher unit sales and subscriptions.

PTON Price Action: Shares of Peloton rose 2.5% to $64.09 at the time of publication Thursday.

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