Peloton Stock Is in Free Fall. This Is Where Analysts Say the Shares Are Going.

Investment banks Stifel, Truist Securities, and Cowen, as well as investment advisory firm Evercore ISI and research firm MKM Partners, all lowered their price targets for Peloton stock on the back of the company’s earnings. 

Peloton reported a net loss of $376 million or $1.25 per share in its latest quarter, delivering a worse performance than the $1.10 per share loss expected by Wall Street. The company, which makes exercise equipment paired with monthly subscriptions, also cut its outlook for revenue this fiscal year—which ends June 2022—to a range of $4.4 billion to $4.8 billion, down from prior guidance of $5.4 billion.

Truist Securities downgraded Peloton from Buy to Hold and cut its price target on the stock from $130 to $68.

The Truist team, led by Youssef Squali, said its downgrade was primarily driven by softer-than-expected demand for bikes and treadmills this fiscal year, despite lower prices, as a result of consumers’ increased mobility. 

Higher losses as a result of a pinch on margins and a lack of near-term catalysts for investors in the short term added to their view. Beyond June 2022, however, they see favorable trends around home fitness remaining intact, and see Peloton having potential for material growth and margin leverage.

MKM Partners also downgraded Peloton Friday, from Buy to Neutral, similarly slashing its price target on the shares from $130 to $70.

Managing director Rohit Kulkarni said they were wrong about how the re-opening and competitive headwinds would impact Peloton’s performance. The research group believes consumer preferences have changed rapidly, and that the company “has as yet seen the entirety of the potential near-term headwind.”

“Peloton is going to be in cash-burn mode now.”

Another downgrade came from Stifel, which changed its rating on Peloton from Buy to Hold and lowered its price target from $120 to $70.

Analysts led by Scott W. Devitt said that prior guidance had given them confidence that Peloton could grow through the reopening period, with a new product launch and expansion into international markets as potential catalysts. That’s changed.

“We expect it will take several quarters to determine a more normalized pace of growth, or more skeptically, whether or not the revised outlook is an indication that the core product may be closer to maturity in existing markets than previously thought,” the analysts said. “We see limited near-term upside as Peloton works through this digestion period.”

Meanwhile, Evercore ISI maintained its In Line rating of Peloton and also slashed its price target, from $108 to $72.

“Essentially, the company mis-forecasted the magnitude of the impact from reopening economies (and the resulting reduction in consumer demand), ongoing supply chain constraints, cost inflation, and logistics challenges when they initially provided FY’22 guidance last quarter,” the team at Evercore, led by Shweta Khajuria, said Thursday. “We remain on the sidelines.”

For its part, Cowen kept its Outperform rating on Peloton but lowered its price target from $130 to $100.

The analysts at Cowen, led by John Blackledge, called Peloton’s results solid but noted the downbeat outlook for earnings. That said, they remain firm in their bullish view on the stock.

“Peloton is the clear leader in the emerging connected fitness segment and is poised to expand its addressable market as awareness rises amid its expansion into new hardware & content verticals and international markets,” they wrote Friday.

Cowen sees demand for convenient fitness options, as well as favorable health and wellness trends, driving multiyear tailwinds.