Why These 6 Peloton Interactive Analysts Were Not Impressed With Q4 Print

Shares of Peloton Interactive Inc PTON continued to rise in early trading on Thursday, after rallying ahead of Nvidia Corp’s NVDA results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Needham On Peloton Interactive

Analyst Bernie McTernan downgraded the rating from Buy to Hold, while removing the previous $10 price target.

Peloton Interactive’s shift from lifetime value (LTV) to customer acquisition costs (CAC) framework “is weighing on near-term financials, as we expect gross adds to be down -18% in FY'24E against -$600M of non-GAAP S&M expense,” McTernan said in the downgrade note.

The company is expected to report another year of negative adjusted EBITDA, which would be the third consecutive year of losses, “as uncertainty builds over the payoff of customer acquisition costs,” he added.

Telsey Advisory Group On Peloton Interactive: Analyst Dana Telsey reiterated a Market Perform rating while reducing the price target from $10 to $6.

Peloton Interactive’s adjusted EBITDA was adversely impacted by “inventory write-offs for Guide and accessories,” Telsey said in a note.

“Sales also remained soft, albeit inline with expectations, as a result of the seat replacement requests constraining supply of the Peloton Bike, as well as demand across the product portfolio pressured by weaker discretionary consumer spending, a shift in consumer priorities toward travel and experiences, and heightened seasonality for the business this year with an even slower than usual summer season,” she added.

BMO Capital Markets On Peloton Interactive: Analyst Simeon Siegel reaffirmed a Market Perform rating, while lowering the price target from $9.50 to $8.

“As we’ve highlighted for some time, we fear growing churn, slipping engagement, and meaningfully lower-than-hoped-for TAM; 4Q's results continue to paint that picture,” Siegel wrote.

“On the other hand, although these fears were contrarian a couple of years ago, they're now consensus, and we wonder if the narrative is again driving PTON shares more so than fundamentals—leading us to wonder if the sell-off is overdone,” he added.

Check out other analyst stock ratings.

Goldman Sachs On Peloton Interactive: Analyst Eric Sheridan maintained a Neutral rating and price target of $7.

Peloton Interactive’s fiscal fourth-quarter results were “mixed to negative,” with in-line revenues “but a sequential decline in connected fitness subscribers and pushing out its outlook of achieving positive FCF (now likely in fiscal 2H24),” Sheridan stated.

“The operating results were impacted by elements of a seat post recall impacting subscriber trends and gross margins (coupled with inventory-related charges acting as a headwind to gross margins),” he added.

Oppenheimer On Peloton Interactive: Analyst Brian Nagel reiterated an Outperform rating on the stock.

Peloton Interactive top-line results were “somewhat better,” suggesting “potentially modestly improving financial and operational controls, but also reflective of ongoing internal and external challenges for the company,” Nagel said.

“While we do not envision a quick snapback in results at Peloton, and continue to recognize meaningful cyclical and structural challenges for the company, we are increasingly of the view that under guidance of new CEO Barry McCarthy, underlying strategic positioning and financial and operational controls of Peloton are likely strengthening,” the analyst further wrote.

KeyBanc Capital Markets On Peloton Interactive: Analyst Noah Zatzkin reaffirmed a Sector Weight rating on the stock.

“PTON delivered in-line sales, which were more than offset by a sub/GM miss and what we sense was underwhelming FCF,” Zatzkin said. This, along with “vague demand color, a forward quarter guide below consensus, and negative 1H24 FCF expects,” adversely impacted the stock, he added.

“Looking ahead we maintain that strategic thinking remains more fluid qtr. to qtr. (i.e., FAAS, PCR, tiered App, college program), which, along with a fragile macro, financial position concerns, and largely unquantified FY24+ objectives, keeps PTON's ability to drive sub growth subdued,” the analyst stated.

PTON Price Action: Shares of Peloton Interactive had risen by 1.20% to $5.49 at the time of publication Thursday.

Photo: Courtesy Peloton