Peloton stock maintains Buy rating at UBS on improved cash flow outlook

Investing.com - UBS maintained its Buy rating and $11.00 price target on Peloton Interactive (NASDAQ:PTON), currently trading at $7.49, following the company’s better-than-expected fourth-quarter results. The stock has shown strong momentum, gaining 7.73% in the past week and an impressive 138.59% over the last year.

Peloton reported quarterly performance that exceeded analyst expectations, with slightly better subscription numbers and lower churn rates than anticipated. While the company’s current ratio of 1.79 indicates healthy short-term liquidity, InvestingPro data shows the company remains unprofitable with a loss per share of $0.30 over the last twelve months. The company also provided fiscal year 2026 guidance that came in "nicely ahead of expectations," according to UBS.

The investment firm noted that while improved cash flow prospects have enhanced the stock’s risk/reward profile, sustainable multiple expansion would require an inflection in subscriber growth, particularly outside of potential price-increase periods that might temporarily elevate churn rates. Trading at an EV/EBITDA multiple of 22.92x, InvestingPro analysis reveals additional valuable insights about Peloton’s valuation metrics and growth potential in its comprehensive Pro Research Report, available to subscribers.

UBS highlighted that Peloton’s churn rates have consistently outperformed expectations over the past three quarters, which "partly validates that the current strategy of ’super serving’ the existing customer is yielding some results."

The firm also observed that Peloton’s fiscal year 2026 guidance appears to incorporate higher churn assumptions than the company experienced in 2022, potentially creating room for improved outlook if actual performance exceeds these conservative projections.

In other recent news, Peloton Interactive reported strong financial results for its fourth quarter of fiscal 2025. The company posted an earnings per share (EPS) of $0.05, significantly beating the forecasted EPS of -$0.05. Peloton’s revenue also surpassed expectations, totaling $607 million compared to the anticipated $580.54 million. Additionally, the company achieved an adjusted EBITDA of $140 million, far exceeding Telsey Advisory Group’s forecast of $85 million and the company’s own guidance range. This outperformance was attributed to strong execution, cost savings, and higher-than-expected hardware sales.

Goldman Sachs upgraded Peloton’s stock from Neutral to Buy, raising the price target to $11.50, citing new management initiatives focused on platform growth. Meanwhile, Bernstein and Telsey Advisory Group both maintained their Market Perform ratings, with price targets of $7.50 and $8.00, respectively. These developments highlight Peloton’s recent progress and the varied perspectives of analysts on its future potential.

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