Peloton Stock-Price Target Set by Goldman at Wall Street High

Peloton's share-price target was raised to a Wall Street-high $96 a share at Goldman Sachs with an affirmed buy rating Thursday.
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Peloton  (PTON) - Get Report shares on Thursday were higher after Goldman Sachs analysts increased their price target on the connected-fitness company to a Wall Street high $96 a share. 

The investment firm's previous target was $84 a share. Goldman analyst Heath Terry affirmed a buy rating on Peloton. 

Peloton shares at last check were 4.1% higher at $70.07.

The firm says that consensus estimates for the New York company's growth and profitability in the near- and long-term are too low.

Peloton's doubling of production and its weeks-long order backlog have persisted through the pandemic as gyms have been closed and people exercise at home.

For the fourth quarter, Terry expects the company to report 208,000 net subscription additions vs. consensus expectations of 199,000. 

The firm estimates fourth-quarter revenue of $630.2 million vs. consensus estimates of $577.4 million. Earnings before interest, taxes, depreciation and amortization should benefit from the lack of marketing spending in the period, the analyst wrote. 

Meanwhile, increased delivery times during the coronavirus period means that deferred revenue from the fourth quarter will bleed over into the first quarter. 

"With management noting that production capacity doubled by June relative to early March, the continued elevation in delivery wait times leads us to believe that the September quarter (fiscal first quarter) will meaningfully outperform the June quarter, in contrast with typical seasonal trends," Terry said. 

Goldman expects the current increase in demand for Peloton hardware and content to increase the slope of its growth curve as consumers remain reticent to return to in-person gyms even as stay-at-home restrictions are lifted. 

Goldman's market-share predictions for the company in 2024 have increased to 5.6% from 3.6% in its initial model.