Peloton shares cycle higher after the connected fitness giant gets a rare buy rating on Wall Street
Canaccord analysts believe the company has finally reached a turning point.
Peloton shares biked up nearly 13% late Friday afternoon after the embattled connected fitness company got a green light on Wall Street.
On Friday, Canaccord Genuity analyst Susan Anderson upgraded the stock’s rating from hold to buy and maintained the firm’s $10 price target, implying a 45% premium from its current share price. Once a pandemic darling, Peloton has had a tough ride trying to convince customers to splurge on $1,500-plus bikes and treadmills. But the company has shifted gears in recent years, instead focusing on a services-first model that offers a variety of subscription-based workout classes.
The strategy is starting to pay off: last month, Peloton topped Q2 sales expectations and raised its full-year EBITDA guidance to $300 million to $350 million, compared with its previous estimates of $240 million to $290 million. Looking ahead, Canaccord is optimistic about Peloton’s strength in the connected fitness industry, including its 6 million loyal member base and high-margin, recurring revenue streams.
“We believe Peloton’s category-leading position in connected fitness sets them up well to follow similar playbooks that other category-defining consumer brands have executed on (i.e. Nike expanding into apparel, Uber into delivery),” Anderson said. Peloton shares are up 58% over the past year.
