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Investing.com -- UBS upgraded Peloton Interactive (NASDAQ:PTON) to Buy from Neutral saying fitness company’s deeper cost cuts and improving operating efficiencies would drive stronger-than-expected earnings by next year.
The brokerage lifted its price target to $11 from $7.50, saying Peloton’s efforts to shrink its retail footprint, cut general and administrative expenses, and reduce technology spending could add more than $80 million in operating savings on top of its existing $200 million target.
UBS estimates Peloton could guide fiscal 2026 EBITDA to between $400 million and $450 million, well above the current Street forecast of $358 million.
Gains are expected despite a planned increase in marketing spend and a potential rise in churn tied to upcoming subscription price hikes.
The firm also sees $90 million to $100 million in annualized revenue from those price increases, assuming a measured impact on cancellations.
Subscriber declines are expected to slow following new product announcements later this year.
UBS noted improving engagement trends, with active users returning to growth in May and June, and interactive visits stabilizing after earlier declines.
Peloton shares are up around 30% so far in 2025 but remain far below their pandemic-era peak.
UBS said the stock’s valuation, trading at an estimated 6–7 times 2026 EBITDA, is undemanding given early signs of a turnaround in cash flow and profitability.
“We see subscription price increases anchoring near-term top line growth, we might also see underlying net subscriber decline stabilizing, outside of price increase driven churn,” analyst at UBS said.
“While that inflection in connected fitness subs is not entirely clear to us yet, we are seeing better data trends for Peloton in terms of traffic and active users”