Peloton Stock Falls as Bike Delivery Delays Continue. Here’s What Wall Street Is Saying.
Peloton Interactive exercise bicycles have been among the most popular stay-at-home purchases in the last year, pushing up revenue and profit beyond expectations.
Delivery delays are forcing the company to spend $100 million to fix the problem. Shares are down 9% to $143.38 on Friday after falling in after-hours trading Thursday despite the company reporting its first $1 billion quarter.
The fiscal second-quarter earnings report prompted a downgrade by Raymond James, which cut its view to Market Perform from Outperform, saying the risk versus reward is “less favorable” now.
Red-hot demand for Peloton’s $1,900 stationary bikes (and the $40-a-month interactive remote classes that go with them) could cool as social distancing requirements fade away with vaccines being rolled out to combat coronavirus.
Peloton (ticker: PTON) raised its full-year revenue outlook, but acknowledged the near-term challenges of getting deliveries back on track and on time.
For the fiscal quarter, it reported earnings per share of 18 cents versus the 8 cents per share expected. Revenue of $1.06 billion compared to the expected $1.04 billion.
Shares of Peloton have soared 381% over the last year as gyms and exercise studios closed to stop the spread of Covid-19, igniting a surge in sales of at-home equipment. Over the same time, the S&P 500 is up 16.6%, setting another 52-week high on Friday.
Peloton said it had 1.67 million subscribers at the end of the quarter, up 134% from the end of the same period a year ago. It now forecasts subscribers to hit 2.27 million by the end of June and full-year sales around $4.08 billion.
Long waits for delivery frustrated Peloton buyers in recent months, and the company has scrambled to keep up with its growing pains. It will be spending the $100 million over the next six months on air and expedited ocean freight to improve delivery speeds.
Raymond James wasn’t entirely negative on the company. In a note Friday it said it remains “positive on fundamentals long-term,” given Peloton’s expected revenue momentum and the fact that it pioneered the connected fitness market.
Several other analysts raised their price targets. Truist analysts raised their estimate to $160 from $145 with a Buy rating. The new target implies the stock could gain another 9.6% from its current level.
Needham raised its price target to $180 from $40, with a Buy rating, saying Peloton appears to be learning its delivery lessons quickly and that it has “no issues” with spending on air delivery.
Rosenblatt Securities raised its price target to $190 from $186.
Raymond James kept its price target at $135, which implies a 7% decline.
Write to Liz Moyer at [email protected]
