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On Friday, Canaccord Genuity analysts adjusted their stance on Peloton Interactive (NASDAQ:PTON), upgrading the company’s stock from Hold to Buy and establishing a price target of $10.00. Currently trading at $6.07, the stock sits within a broader analyst target range of $5-$20. The change in rating comes as the analysts recognize Peloton’s position as a leading force in the connected fitness industry, backed by a strong membership base and a high-margin recurring revenue stream. According to InvestingPro data, the stock has shown significant volatility, with a 28% gain over the past six months despite recent market challenges.
Peloton Interactive, acknowledged for its early investment in the connected fitness space, has cultivated a loyal community of 6 million members. The company’s strategic shift towards cost restructuring and balance sheet improvement is noted as a critical step towards regaining growth momentum. Financial metrics from InvestingPro show a healthy current ratio of 2.06, indicating strong short-term liquidity. Canaccord Genuity expects Peloton to achieve a significant increase in adjusted EBITDA, forecasting between $300 million and $350 million for fiscal year 2025, a marked rise from the $3.5 million reported in fiscal year 2024.
The analysts project a positive revenue trajectory for Peloton starting in fiscal year 2026, driven by management’s revenue initiatives. This growth is anticipated to be complemented by an expansion in subscription growth in fiscal year 2027, as the company plans to introduce adjacent products. The focus on profitability and free cash flow, coupled with a reduction in leverage, signals a potential turning point for Peloton.
Canaccord Genuity’s outlook for Peloton is buoyed by the company’s influential global brand and dedicated customer base. The analysts believe that Peloton is positioned at a pivotal moment in its journey, with substantial opportunities for value appreciation from its current market levels.
In other recent news, Peloton Interactive’s second-quarter fiscal year 2025 results have drawn varied reactions from analysts. The company reported a revenue of $674 million, surpassing the consensus estimate of $655 million, which led BofA Securities to raise its price target to $11.50 and maintain a Buy rating. Peloton’s EBITDA also exceeded expectations, coming in at $58.4 million, significantly higher than the guidance range and Street estimates, primarily due to reduced operating expenses and a strong gross margin. Telsey Advisory Group maintained its Market Perform rating with an unchanged price target of $11.00, acknowledging Peloton’s significant beat on adjusted EBITDA and its increased full-year 2025 guidance.
Meanwhile, Citi analysts revised their price target for Peloton from $11.00 to $10.00, maintaining a Neutral stance, despite improvements in customer engagement and unit economics. Needham also maintained a Hold rating, citing challenges in revenue growth despite operational advancements. Truist Securities raised their price target to $11.00 but kept a Hold rating, recognizing Peloton’s efforts to recalibrate its business strategy while expressing caution about future growth visibility.
Peloton’s free cash flow for the second quarter reached $106 million, a substantial increase from the previous quarter, with projections of over $200 million for the fiscal year. The company’s focus on marketing efficiency and product innovation under new CEO Peter Stern (AS:PBHP) is noted, but analysts remain cautious about the broader demand landscape and long-term growth prospects. These developments indicate Peloton’s ongoing efforts to improve financial stability and profitability amidst a competitive market environment.
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