Goldman Sachs Raises Peloton's Price Target Citing Unappreciated Gains

Goldman Sachs has raised its price target on shares of Peloton Interactive PTON citing “an acceleration and steepening of the adoption curve.”

The Peloton Analyst: Heath Terry maintained a Buy on Peloton and raised the price target from $84 to $96.

The Peloton Takeaways: Terry raised the price target due to consensus estimates being too low on Peloton’s user base and financials.

For the fourth quarter, Peloton is guiding for 154,000 to 164,000 new subscribers. Terry believes the company will add 208,000, coming in ahead of both the company estimates and consensus of 199,000. Terry’s estimate would put the company at 1.09 million subscribers to end the fiscal year.

Terry cites a huge backlog of customer orders and prior announced six- to eight-week wait time for the company. Wait times have come down, but demand has stayed for Peloton.

The analyst also believes revenue will hit $630.2 million in the fourth quarter, which would be an increase of 182% from the prior year. Terry sees the company’s revenue hitting $3.65 billion, $4.34 billion and $6.03 billion over the next three fiscal years respectively.

PTON Price Action: Shares of Peloton are up 137% in 2020. Shares were up 4% to $70.12 at the time of publication.

Peloton will report fiscal fourth-quarter earnings on Sept. 10.

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