Peloton Wavers After Baird Analyst Affirms Outperform Rating

The stock has roller-coastered since the late-September IPO, having run up near $37 in early December.
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Peloton (PTON) - Get Report on Thursday wavered after an analyst at Baird affirmed an outperform rating and $35 price target on the connected-exercise company.

The $35 price target indicates 23% upside from Tuesday's closing price at $28.40. 

At last check Thursday, the stock was off 1% at $28.12. But it earlier traded as high as $29.35, up 3.3%. 

Baird analyst Jonathan Komp pegged the New York company a "Fresh Pick" after the stock declined 19% in December, bringing it below its $29 initial public offering price.

In a note Thursday, Komp said the drop probably stemmed from factors including concerns about new stock entering the market from the expiration of the IPO lockup. Peloton went public in September.

The analyst sees "no material fundamental changes" at Peloton, thus "setting the stage for a favorable trading opportunity entering 2020." 

That includes the potential for "healthy upside" in the fiscal second and third quarters, he wrote. The drivers include a "positive tone from management [and a] strong inventory position" as the company entered the holiday season, he said.

The company also got a fresh publicity boost from its controversial ad campaign in December.

Peloton “has a large addressable market and enviable competitive positioning that can help to capture a $5 billion-plus revenue opportunity by fiscal 2024," Komp wrote. 

In mid-November TheStreet’s Jim Cramer, speaking on his “Mad Money” program on CNBC, suggested that the stock becomes a buy in March, after the lockup period for insiders expires.

“When that happens in March - I know that’s still a [long] way, but people are going to be thinking about it - I expect the stock to get hit,” Cramer said. “Now that is probably when you pounce.”

Cramer particularly liked Peloton’s strong revenue increase in its first quarter after going public.

In that first posting, Peloton in early November reported a fiscal first-quarter net loss of $1.29 a share, narrowed from $2.18 in the year-earlier quarter. 

The deficit was wider than the 36-cent loss estimated in a survey of analysts by FactSet. 

Revenue for the quarter ended Sept. 30 more than doubled to $228 million, exceeding the consensus estimate of $199.1 million.

The stock has roller-coastered since the IPO, having run up near $37 in early December.

Analysts are largely positive on the stock, with 18 of 19 surveyed by Bloomberg holding the equivalent of buy ratings on the stock and one rating it neutral. 

At the same time, in early December Citron Research, run by the prominent short-seller Andrew Left, placed a $5 price target on the stock.