Sell-Side Likes Peloton's Winning First Quarter As Public Company

Peloton Interactive Inc PTON saw stronger results than expected in nearly every metric in the connected fitness bike provider's first quarter as a public company, keeping sell-side analysts along for the ride.

The Analysts

JMP's Ronald Josey reiterated a Market Outperform rating and raised the price target from $33 to $34.

UBS analyst Eric Sheridan reiterated a Buy rating and $30 price target on the stock.

Baird's Jonathan Komp kept an Outperform rating on Peloton while boosting the target price from $28 to $29.

The Theses

Josey noted subscribers and revenue both beat consensus estimates, and gross margin was about 35% above consensus. EBITDA was $62 million more profitable than analysts expected.

Komp was "highly encouraged" by the first quarterly report - especially after a Tuesday sell-off that lowered the price. Peloton's instructor-led content model is disruptive and in a large market, he said.

"While growth investments are expected to limit near-term profitability, we see multiple levers that could support upside," Komp wrote in a note.

Sheridan liked management's positive tone as well as the results, including the revenue, EBITDA and subscription number beats.

Sheridan did point to a few negatives, including expectations of modestly increasing churn in the second quarter and 2020.

IPO Volatility

He also said he expects Peloton shares to remain volatile on concerns around recent IPOs concerning their paths to profits and lock up expiration flows. Overall, though, UBS continues to have a constructive view on the stock.

After taking a big drop Tuesday, Peloton shares were up 1% to $23 at time of publication.

Related Links:

Peloton Reports First Sales Beat As A Public Company

Peloton Falls As Analyst Post-IPO Quiet Period Ends

Photo credit CNW Group/Peloton.