Peloton Interactive's Q2 Should Be Good Enough To Hold Onto Gains, Says Analyst

  • Needham analyst Bernie McTernan reiterated a Buy rating on the shares of Peloton Interactive Inc PTON with a price target of $14.
  • FY2Q revenue came in ahead of expectations, driven by better-than-expected product sales from their North American Bike portfolio and demand during Black Friday/Cyber Monday promotions, said the analyst.
  • The analyst added that Peloton exceeded their expectations across all Connected Fitness Products in the quarter.
  • FY3Q revenue guidance is roughly in-line with consensus as PTON exits the holiday selling season and promotional activity eases, remarked the analyst.
  • PTON also called out continued macro uncertainty impacting consumer spending patterns and near-term demand for Connected Fitness hardware remains challenged, the analyst mentioned.
  • Of the long list of priorities for CEO Barry McCarthy's second year on the job, the one that stood out is returned YoY revenue growth, added the analyst.
  • The analyst believes connected fitness has staying power beyond the pandemic, given the convenience and affordability it brings to the consumer and PTON's lead should only grow over time, given its focus on a high quality consumer experience driving its flywheel.
  • The analyst remarked that Peloton's early embrace of the category and leadership position has given it the scale to produce the most content in the fitness industry.
  • Price Action: PTON shares are trading higher by 17.9% at $15.24 on the last check Wednesday.
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