Telsey Advisory Cuts Price Target On Peloton Interactive By 26%

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating for Peloton Interactive Inc PTON, citing the lack of visibility into demand levels, profitability, and cash flow.
The analyst also lowered the price target to $11 from $15, implying a 22% upside.
Related: Peloton Exits In-House Production As Part Of Turnaround
The analyst said the company's decision to shut down internal manufacturing is not surprising given ongoing changes in the business model to reduce fixed costs, transition to a more variable cost structure, and reduce the cash burn.
The analyst noted that PTON's new CEO, Barry McCarthy, expressed his view of focusing on content and subscriptions.
The change should provide cost savings in FY24, in addition to the $800 million in cost savings previously identified.
However, there is a risk in relying on a single supplier for the welding and assembly of most of its products, although the analyst notes that Peloton has dual sources for some components.
Price Action: PTON shares are trading lower by 3.73% at $8.90 on the last check Wednesday.
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