Peloton Interactive Analysts Give Mixed Reviews: 'Better Than Expected Q3 Sales And EBITDA ... Offset By Soft Q4 Subscriber Guidance'

Shares of Peloton Interactive Inc PTON recovered slightly in the premarket on Friday, after having plunged in the previous trading session on wider-than-expected quarterly losses in the third quarter. The shares are down again after the market opened.

These analysts offer mixed reviews on earnings.

Truist Securities On Peloton Interactive

Analyst Youssef Squali reiterated a Hold rating while reducing the price target from $15 to $10.

Peloton Interactive’s fiscal third-quarter results and fourth-quarter guidance indicated management “is making progress on fixing” the company, reducing costs and inventory while stabilizing cash flows and liquidity “amid a low demand environment,” Squali said in a note.

“A seasonally weak 4Q & initiatives to accelerate growth in FY24 are pressuring the bottom-line ST — we now expect FCF profitability in 1H24 vs. 2H23 previously,” the analyst wrote.

“Much work remains to prove that various new initiatives (FaaS, CPO, digital, new products, partnerships, and a revamped app) will drive significant growth and profitability LT,” he added.

Needham On Peloton Interactive

Analyst Bernie McTernan maintained a Buy rating while slashing the price target from $20 to $10.

Estimates for the company have been lowered to reflect “a more conservative view on product gross margins, which we now assume will continue to be negative in FY'24E and moderately higher S&M expense,” McTernan said.

“We forecast subscribers to fall slightly in FY'24E given the trajectory of gross adds,” he added.

Check out other analyst stock ratings.

Telsey Group On Peloton Interactive

Analyst Dana Telsey reaffirmed a Market Perform rating, while reducing the price target from $11 to $10.

“Peloton's 3Q23 sales and EBITDA were better than expected as promotions and new initiatives, such as FAAS and CPO (together 24% of hardware sales in 3QF23), drove more hardware sales and new subscribers,” Telsey wrote in a note. “The company also made progress on improving its FCF,” she added.

“However, the better-than-expected 3QF23 result was more than offset by soft 4QF23 subscriber guidance, with the company forecasting a sequential decline for the first time, and the announcement that Peloton had settled its litigation with DISH on infringement of DISH's streaming patents and agreed to pay a large $75M penalty,” the analyst further stated.

William Blair On Peloton Interactive

Analyst Ralph Schackart reiterated an Outperform rating on the stock.

“The fitness-as-a-service (FaaS) initiative showed strength in the quarter,” Schackart said. “FaaS subscribers grew 70% sequentially in the third quarter; the initiative drives primarily incremental revenue, as 62% of consumers indicated that they would not have subscribed had it not been for the flexibility of the rental program,” he added.

The FaaS and Peloton Certified Refurbished (PCR) segments combined “accounted for roughly 24% of Connected Fitness Hardware sales in the quarter, with both programs continuing to scale through fiscal 2024,” the analyst further mentioned.

Bernstein On Peloton Interactive

Analyst Aneesha Sherman maintained an Outperform rating and price target of $20.

Although Peloton Interactive reported “solid” quarterly results, “the key question remains on sustainable growth outlook,” Sherman said.

“The weak Q4 (summer quarter) guide and commentary spooked investors, amidst a tough macro for consumer discretionary,” she added.

PTON Price Action: Shares of Peloton Interactive were down 3.66% Friday morning at publication.

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Photo: Courtesy Peloton