5 Peloton Analysts On Stay-At-Home Stock's Q2 Results: 'Kicking Shipping Into Gear'

Peloton Interactive Inc PTON shares were trading lower Friday after the company’s guidance fell short of investors’ high expectations.

On Thursday, Peloton reported second-quarter adjusted EPS of 18 cents on $1.06 billion in revenue. Both numbers exceeded the consensus analyst estimates of 9 cents and $1.03 billion, respectively. Revenue was up 128% from a year ago and represented Peloton’s first quarter that passed the $1-billion revenue mark.

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Peloton also reported 1.67 million connected fitness subscribers, up 134% from a year ago.

The company raised its full-year revenue guidance from $3.9 billion to $4 billion, but it did not raise its earnings outlook, disappointing the market.

Peloton's Growth Story In High Gear: The combination of Peloton’s valuation and its extremely difficult comps in coming quarters make the stock tough to buy at this point, Raymond James analyst Aaron Kessler said in a note. 

“While demand remains strong, we believe trends could soften somewhat in 2H21 with social distancing measures likely to ease given the vaccine rollout,” the analyst said. 

Rosenblatt Securities analyst Bernie McTernan said the wheels are still rolling on the Peloton growth story.

“While we expect expedited shipping to modestly weigh on gross margins near-term, the attractiveness of the business model has not changed, in our view, with significant subscriber growth acquired at attractive rates and low churn leading to the migration of revenue and profits towards higher margin and recurring subscription revenue,” the analyst said. 

Needham analyst Laura Martin said Peloton’s $13-per-month digital-only subs are the company’s most undervalued asset.

“Unlike many COVID beneficiaries, PTON should report rev and EBITDA growth in calendar 2021 owing to non-same store comps of adding Germany, UK and Canada sales y/y, a larger installed base of sub revs at 64% gross margins, and a broader product portfolio, with 4 products instead of 2,” the analyst said. 

Peloton's Rising Shipping Costs: KeyBanc analyst Edward Yruma said Peloton is now “kicking shipping into gear” with a $100-million shipping investment.

“A $100M investment in expedited shipping will pressure 3Q margins, but supply chain commentary is finally favorable,” the analyst said. 

BofA Securities analyst Justin Post said Peloton’s near-term shipping issues aren’t dimming its bright long-term outlook.

“We expect added supply costs to be short-term, and would view any weakness on margin guidance as a particularly attractive buying opportunity.” 

PTON Ratings, Price Targets: Raymond James downgraded Peloton from Outperform to Market Perform and dropped its price target.

Rosenblatt has a Buy rating and lifted its price target from $186 to $190. 

Needham has a Buy rating and raised the price target from $140 to $180.

KeyBanc has an Overweight rating and $185 target.

BofA Securities has a Buy rating and $175 target.

PTON Price Action: Peloton shares were down 8.69% at $143.84 at last check Friday. 

Photo courtesy of Peloton.