The investment firm notes that Peloton is down about 40% from its January high following voluntary recalls of its Tread and Tread+ treadmills and negative press around the perceived safety of the products.
"Although we fully expect some impact from the recalls, we believe the impact will be short-lived and that management's guidance likely bakes in an excessive amount of conservatism," the firm said.
Shares of Peloton at last check were 5.2% higher at $108.36. Loop Capital's price target indicates 32% potential upside from the stock's Friday closing price.
The firm also notes that Peloton has delivered upside vs. the midpoint of Wall Street guidance in all its quarters since it went public. The average quarterly revenue beat was 11%, and earnings before interest, taxes, depreciation and amortization came in more than triple guidance.
Loop is positive on the company's history of underpromising and overdelivering.
Last month, Peloton said it planned to build its first U.S. factory in Troy Township in Wood County, Ohio.
Peloton said it expected to break ground on the facility, called Peloton Output Park, this summer, and the factory would begin making Peloton Bike, Bike+ and Peloton Tread starting in 2023.
The company said it would commit $400 million to the facility, which will sit on more than 200 acres and have more than 1 million square feet of space. It is expected to create more than 2,000 new jobs.