Home exercise machine maker Peloton (PTON) was rising after the company was the subject of a bullish note from Wedbush analysts, who initiated coverage on the stock with an outperform rating.
The firm also placed a $37 price target on shares of Peloton. That price target represents a potential 25% upside from the stock’s closing price Tuesday of $29.69.
Wedbush is bullish because it said that Peloton wasn't just a fad and it doesn’t have any lower-priced interactive stationary bike competition that represents a “legitimate threat” to the company’s business.
"Based on our analysis of the business model, our expansive survey work of both Peloton users and prospective customers, and our own experience with the product, we do not believe that Peloton will prove to be a fad, but instead one of a small number of fitness companies likely to be an enduring force going forward," wrote Wedbush analyst James Hardiman.
Wedbush estimated that Peloton’s subscription business can reach 4 million people with 3 million subscriptions coming from the U.S., representing only about 2% of U.S. households.
The company has had a bumpy ride since its debut in late September.. While the stock has risen nearly 16% since its debut, it is well below its intraday high above $37 a share.
The company in December was the subject of a bearish note from short-seller research firm Citron Research. Andrew Left’s outfit placed a $5 price target on the company as the firm said that Peloton's enterprise value per subscriber was out of step with competitors like Fitbit (FIT) and Planet Fitness (PLNT) .
Peloton shares were climbing 2.5% to $30.45 on Wednesday.