Peloton Share Target Lifted Due to Closed Gyms, Word of Mouth

Peloton could see "multiple quarters of holiday-like demand" because of the coronavirus impact, Stifel says in a report.
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Peloton Interactive  (PTON) - Get Report shares rose, after Stifel analyst Scott Devitt affirmed a buy rating on the connected fitness product company and raised his price target on the shares to $62 from $55.

The company will continue to benefit from the coronavirus pandemic, he said.

"As we near the end of the June quarter, we are incrementally positive on Peloton’s current momentum and long-term opportunity as the leader in the rapidly growing connected fitness category,” Devitt wrote in a commentary cited by Seeking Alpha.

“Shifting consumer behavior, gym closures, social-contact avoidance and steady demand from word-of-mouth have the potential to fuel multiple quarters of holiday-like demand ... while also pulling forward the margin-expansion path by two to three years."

Ed Ponsi, one of TheStreet's finance mavens, is positive on the stock, too.

“Peloton has just broken out of an ascending-triangle formation,” he wrote. “This bullish pattern projects the stock to the $70 area.”

To be sure, volume on the breakout is lacking, Ponsi said. “Ideally, you'd like to see an increase in volume as the stock breaks to new highs.”

In addition, “PTON is already up 92% this year, and it's only June. At some point, demand for Peloton's products is likely to decline,” he wrote.

In the quarter ended March 31, Peloton revenue soared 66% from the year-earlier quarter to $524.6 million. 

Peloton shares recently traded at $53.88, up 5.9%. The stock has more than doubled in the past three months, compared with a 35% increase for the S&P 500.