7 Peloton Analysts On The Q4 Report: 'A Bona Fide Growth Company'

Peloton Interactive Inc PTON analysts raised their price targets after the at-home exercise company issued its fourth-quarter report and guidance for fiscal year 2021. 

The Peloton Analysts: MKM Partners analyst Rohit Kulkarni maintained a Neutral rating on Peloton and raised the price target from $70 to $90.

Raymond James analyst Aaron Kessler reiterated an Outperform rating and raised the price target from $65 to $109.

Needham analyst Laura Martin reiterated a Buy rating and raised the price target from $65 to $110.

Wedbush analyst James Hardiman maintained an Outperform rating and raised the price target from $100 to $116.

Stifel analyst Scott Devitt maintained a Buy rating and raised the price target from $72 to $120.

KeyBanc Capital Markets analyst Edward Yruma maintained an Overweight rating and raised the price target from $74 to $120.

Rosenblatt analyst Bernie McTernan reiterated a Buy rating and raised the price target from $105 to $130.

The Peloton Takeaways: “The result is a bona fide growth company that is already delivering solid profits event at this early stage of growth,” Wedbush's Hardiman said in a note. 

Rosenblatt's McTernan said the standout item in Peloton's earnings report was the better-than-expected Connected Fitness subscriber guidance. 

“PTON has doubled Connected Fitness subscribers in each of the last three fiscal years, and now guidance calls for a fourth straight year of growth around these levels,” the analyst said.

Needham's Martin said that faster consumer adoption during COVID-19, a four-product hardware strategy and higher bike unit economics are three value drivers that were not present for Peloton before the pandemic. 

Analysts highlighted the company’s new bike and treadmill offerings.

“Peloton has a robust catalyst pipeline ahead as it brings its new better-best product strategy to market,” said Stifel's Devitt.  “The introduction of the lower-priced Tread could serve as a meaningful driver beyond FY21 as the product ramps into a large treadmill addressable market.”  

Rosenblatt's McTernan expects the value offering to be a "substantial driver" of gross adds in fiscal 2022. 

"We continue to assume PTON is able to gain 20% market share of treads delivered in their markets, driven by the value tread."

Needham's Martin said the firm likes the bike tier strategy best, as it allows existing users to trade in their bike for a Bike+, "which implies PTON will also launch a certified used bike in the future." 

KeyBanc's Yruma said the Tread "offers both a lower cost and more compact footprint, which should help materially enhance its market opportunity." 

Kulkarni said the "yellow flag" in Peloton's report was the 2021 gross margin outlook and less upside to the subscription segment in the fourth quarter. 

“We stay on the sidelines as valuation feels fairly balanced right now,” said Kulkarni.

What’s Next For Peloton: “Management initiated its FY21 guidance dramatically ahead of the Street in almost every respect, implying that momentum seen during the banner FY20 was not an anomaly in their view,” Wedbush's Hardiman said.

Rosenblatt's McTernan said the firm is looking for an update on Peloton's serviceable addressable market at the company's investor day. 

"Last year the company estimated it was 12m in their footprint, though that have since suggested it was much higher,” the analyst said of the company’s upcoming Sept. 15 virtual investor and analyst presentation.

Peloton CEO John Foley was on CNBC Thursday morning.

“You don’t need another workout system besides the bike,” Foley said when asked what happens to subscribers following the pandemic.

Foley implied the bike is a full-body workout.

Peloton will “still be an incredible growth story” after the pandemic, the CEO said. 

PTON Price Action: Peloton shares were down 2.08% at $85.93 at last check Friday. 

Shares are up over 200% year-to-date and hit a 52-week high of $98.61 in early September.

Photo courtesy of Peloton.