After Peloton's Q1 Beat, Analysts Forecast Supply Chain Challenges

Peloton Interactive PTON shares were trading lower in Friday's session after the company reported first-quarter earnings results. 

The company has faced supply chain and delivery issues, analysts said, but they remain optimistic that PTON will solve the problem by adding capacity with a new plant coming online shortly.

The Peloton Analysts: UBS analyst Eric Sheridan maintained a Neutral rating on Peloton and raised the price target from $85 to $115.

Rosenblatt Securities analyst Bernie McTernan maintained a Buy on Peloton and lifted the price target from $140 to $155.

Raymond James analyst Aaron Kessler reiterated an Outperform on Peloton with a price target lifted from $109 to $135. 

Needham analyst Laura Martin reiterated a Buy rating with a $125 price target. 

See Also: Peloton Reports Q1 Earnings Beat, Fitness Subs Up 137% YoY

The Peloton Takeaways: Against a mix of new product launches, strong demand and supply and logistics challenges, Peloton disappointed on connected fitness net adds versus investor expectations and will likely remain constrained by supply and logisitics, UBS analyst Sheridan said in a note. 

Rosenblatt Securities analyst McTernan said demand is strong and the business model is working despite transitory hiccups.

“PTON delivered continued subscriber growth acceleration in FY'21E. The company has continued to add customers attractively with a positive net customer acquisition cost,” the analyst said. 

Peloton Supply Chain Challenges: Sheridan said Peloton supply chain continues to be a challenge for the company.

McTernan said the company has been able to make enough units to keep up with demand of late, but an incrementally tougher scenario is expected in the December quarter due to port congestion and warehouse closures. 

“PTON will help to solve these problems by adding capacity with a new plant coming online shortly and expedited shipping which will pressure margins, although we only expect an impact to the December quarter.”  

Kessler said order-to-delivery times remain elevated for Bike and Bike+ due to factors including port delays, warehousing issue  and forest fires.

“The company expects to reduce wait times on Bike by the end of the year; Bike+ waits may remain elevated for a couple quarters as capacity ramps,” the analyst said. 

Martin said what she likes least are elevated Bike+ wait times for the next two quarters, owing in part to port congestion and COVID-19-related warehouse closures.

“Therefore, PTON is adding shipping expenses in FY2Q to lower delays during the Holidays. We assume these delays are behind the stock's 7% decline in aftermarket trading.”  

PTON Price Action: Peloton shares were trading 2.34% higher at $129.59 at last check Friday. 

Peloton's stock has a 52-week high of $139.75 and a 52-week low of $17.70.

Courtesy photo.