Peloton Surges on Cowen Share Price Target Boost

Peloton 'is the clear leader in connected home fitness,' Cowen says.
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Peloton Interactive  (PTON) - Get Report was speeding up Tuesday after a Cowen analyst raised his share price target saying the coronavirus pandemic and the company's own efficiencies have helped make its brand "synonymous with the burgeoning connected fitness category."

Shares of the New York-based company were rising 4.5% to $55.41.

Analyst John Blackledge said in a note to clients that Peloton "remains uniquely well positioned via its vertically integrated model."

"Peloton is the clear leader in connected home fitness," he said. "And their lead is widening as they ramp over time from >1,000 hours / month of fitness content in mid-19 to their goal of around 1,500 hours / month, including newer verticals like strength training, yoga, outdoor, and family-oriented exercises, among others."

Among other things, Blackledge cited the company's "premium hardware supported by a sophisticated supply chain/logistics & (Direct-to-Consumer) model with a high touch brand experience that is uniquely focused on customer satisfaction."

"Putting these attributes together, we believe Peloton's powerful brand is synonymous with the burgeoning connected fitness category, driving high retention/low churn, network effects, & leverage over time," Blackledge said. "Meanwhile, the pandemic has created a virtuous cycle driving both increased hardware demand as well as a surge in engagement and lower monthly churn levels." 

The coronavirus outbreak has forced health clubs to close in order to satisfy social distancing and quarantine requirements.

The analyst said that he believes "the company should be viewed not as a fitness brand but rather as a direct to consumer tech company that is leveraging the internet to reach customers during an inflection point for the industry."

"Ultimately, we think PTON benefits from a unique amalgamation of technology, premium hardware, and software together, and a comparison to prior fitness focused companies is a largely flawed analogy," Blackledge said.

This was the second time in as many days that Peloton's share price target was boosted. 

On Monday, Stifel analyst Scott Devitt affirmed a buy rating on the company and raised his price target on the shares to $62 from $55, noting that Peloton will continue to benefit from the coronavirus pandemic.