Peloton Stock Faces 'Increased Uncertainty,' Says UBS

Peloton Interactive
stock should continue its descent, said one UBS analyst who is pessimistic on the future of the at-home-fitness company’s growth.

UBS analyst Arpine Kocharyan halved her price target on
Peloton
stock (ticker: PTON) to $4 from $8, and maintained her Sell rating. The analyst’s new price target implies a 10% decrease from the stock’s closing price of $4.46 on Friday. She also trimmed her 2024 total revenue estimate to $2.86 billion from $2.98 billion, but her new estimate remains ahead of the Wall Street consensus estimate for $2.79 billion, according to FactSet. Kocharyan also lowered estimates for earnings before interest, taxes, depreciation, and amortization through fiscal 2026.

Kocharyan said in a research note that her continued bearish stance on the stock comes from increased uncertainty over subscription growth “given increased uncertainty over subs growth outlook.”

Kocharyan previously flagged a positive trend in the Peloton website’s total interactive visits—total visits excluding people who click on the website and then click back out again—in May and June. The analyst wrote that the firm’s recent data showed that trend turned negative in July, with August signaling further weakness.

Peloton did not immediately respond to a request for comment.

In the company’s fourth-quarter financial results reported on Aug. 23, Peloton reported a subscriber decline of 29,000 from the previous quarter. This followed the company warning in May that it expected to see a seasonal subscriber drop as the weather turned warmer outside.

However, CEO Barry McCarthy said in Peloton’s fourth-quarter shareholder letter that “the slowdown exceeded our expectations through May and through the first three weeks of June as consumer spending shifted toward travel and experiences.”

Kocharyan added that “we still do not see tangible evidence of PTON meeting bull-case growth expectations for connected fitness subs.”

Peloton stock is falling 2.1% to $4.36 on Monday, which would be a record low. If the stock closes at a new low, it would be its eighth record closing day for the month, according to Dow Jones Market Data. The stock has tumbled 45% this year.

Write to Angela Palumbo at [email protected]

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