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On Tuesday, UBS analysts, led by Arpine Kocharyan, maintained a Neutral rating on Peloton Interactive (NASDAQ:PTON), with a steady price target of $7.50. The stock, currently trading at $7.60, has shown remarkable momentum with a 140% return over the past year, according to InvestingPro data. The firm’s assessment comes amid expectations of slightly improved underlying EBITDA due to cost savings achieved this year, despite a forecast for flat revenue in FY’26.
Analysts at UBS predict that Peloton’s FY’26 EBITDA will reach $365 million, a slight increase from the previously estimated $353 million. This forecast comes as the company currently trades at a high EV/EBITDA multiple of 271x, with InvestingPro analysis showing 8 additional key valuation metrics and tips available to subscribers. Looking ahead, the firm also revised its FY’27 EBITDA forecast to $377 million from $364 million.
The updated financial outlook follows Peloton’s raised Free Cash Flow (FCF) guidance to $250 million, up from the initial "at least" $200 million. The company maintains healthy liquidity with a current ratio of 1.65, though UBS cautions that the growth rate in FCF for FY’26 is expected to be significantly lower than that of FY’25. This projection is based on the assumption that the substantial improvements in working capital seen in FY’25 are unlikely to be replicated in the following year.
UBS is currently modeling a 63% FCF conversion for Peloton in the next fiscal year. The firm’s analysis indicates a cautious stance, considering the potential increase in marketing expenditures that may be required to stimulate demand for Peloton’s products and services. Despite the improved EBITDA forecasts, the Neutral rating suggests that UBS analysts see limited upside potential for Peloton’s stock at the current price target. For a comprehensive analysis of Peloton’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro.
In other recent news, Peloton Interactive reported its third-quarter 2025 financial results, revealing a mixed performance. The company’s revenue reached $624 million, slightly exceeding forecasts, but earnings per share (EPS) fell short at -$0.12 compared to the anticipated -$0.07. Analysts from Macquarie responded positively, raising Peloton’s stock target to $10 and highlighting strong growth and effective cost management. Conversely, Telsey Advisory Group lowered its price target to $8, maintaining a Market Perform rating due to concerns over subscriber trends and consumer spending pressures.
Peloton’s adjusted EBITDA for the quarter was $89.4 million, surpassing both company guidance and consensus estimates. The company also reported five consecutive quarters of positive adjusted EBITDA and free cash flow, with the latter reaching $95 million. Peloton’s full-year guidance was revised upwards, with revenue now expected between $2,455 million and $2,470 million, and adjusted EBITDA projected to be between $330 million and $350 million. Despite these positive financial metrics, Citi maintained a Neutral rating on Peloton, citing a cautious outlook due to the risk/reward balance at current stock levels.
The company has also been focusing on strategic initiatives under its new CEO, Peter Stern (AS:PBHP), aiming to innovate and expand customer reach. Peloton’s gross margin increased significantly, driven by improvements in cost structure and unit economics. While some analysts remain cautious, Peloton’s resilience is attributed to its high-income user base and new budget-friendly options, which could help sustain performance in a challenging economic environment.
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