Peloton Gets Analyst Blessings Even After Third-Quarter Outlook Misses

Peloton shares dropped on weak fiscal-third-quarter estimates, even as the streaming fitness company's second-quarter results and full-year revenue guidance exceeded expectations.
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Peloton's  (PTON) - Get Report shares took a beating after its fiscal-second-quarter earnings release, but analysts covering the streaming fitness company were bullish on the stock.

The New York company reported downside third-quarter guidance though it topped analysts' second-quarter expectations and provided upside full-year guidance. 

Analysts at JPMorgan reiterated their overweight rating with a $38 price target. Analyst Doug Anmuth lauded the upside of the company’s connected fitness subscription service, positive profit outlook and improved fiscal 2020 outlook on the bottom line.

“Peloton is the largest interactive fitness platform in the world [and] is well positioned to disrupt the fitness industry through its at-home connected fitness subscription platform,” Anmuth said.

The firm also notes that the addressable market has been penetrated only 5% by Peloton.

Analysts at KeyBanc also maintained their overweight rating on the stock, with a $45 price target. They said the 77% revenue growth in the second quarter “will almost certainly be the highest in our coverage over the holiday.”

The firm also had an explanation for the company’s soft third-quarter guidance.

“Third-quarter variance relative to consensus is driven by stronger second-quarter results, and we point to the increase in fiscal 2020 guidance as more illustrative of business performance," analyst Edward Yruma wrote. 

"This remains one of the best growth stories.” 

BMO analyst Simeon Siegel cited a “mixed quarter” in lowering his price target to $26 a share while affirming his market-perform rating on the stock:

“We couldn’t be more positive on Peloton the product; those that buy in are very in. Conversely, its total addressable market carries inherent restrictions. And with the third-quarter's digital member decline potentially prompting the price cut, PTON may relinquish pricing within connected fitness as it chases total addressable market via digital,” Siegel wrote.

Finally, analysts at Wedbush maintained their outperform rating and $37 price target. 

Wedbush raised its 2020 subscription estimates 0.8% to 929,000 from 922,000, while also shrinking its estimate of the company's loss before interest, taxes, depreciation and amortization to $97 million from $164 million. 

Peloton shares at last check dropped 9.3% to $29.66.