Veteran trader reboots Peloton stock price target ahead of earnings

In cycling, the peloton is the place to be.

The peloton is a large group of riders bunched together on a race route. Cyclists save energy by riding close to others, and pedaling in the middle of a well-developed group can reduce drag by as much as 95%.

💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰

Peter Stern, president and CEO of Peloton Interactive  (PTON) , leaned into that definition during the fitness company’s fiscal-second-quarter earnings call in February.

“We are focused on deepening the connections our 6 million members have with each other and with Peloton,” Stern told analysts. 

“In September, we launched Teams, which enables members to share workouts and compete in challenges. Seventy thousand Teams have been created since launch.”

Related: Veteran value investor targets Target with surprising review

The company, which saw its business surge during the Covid pandemic, posted mixed results, beating Wall Street’s sales estimates but losing more money than expected.

“We see significant opportunities ahead, but we have a steep hill to climb to reach sustained, profitable growth,” Peloton said in its letter to shareholders. 

“Returning to growth begins with a new focus on and execution against our purpose – empowering people to live fit, strong, long and happy.”

Most of Peloton’s revenue comes from subscriptions.

Peloton CEO: We’re closely monitoring tariffs

During the call, Stern addressed concerns about President Donald Trump’s proposed tariffs, which had not yet gone into effect.

“As I’m sure you all know, the questions around tariffs really represent a rapidly moving target,” he said. “And so we’re closely monitoring it, I’m sure, alongside all of you. 

“The good news here is that no Peloton-branded hardware products are subject to the tariffs from China or if they were to reemerge from Mexico or Canada.”

“And of course, most of our revenues come from subscriptions,” he added.

Peloton will soon be reporting quarterly results. The New York company’s shares are down 36% since January but up 82% from a year ago.

Investment firms have been issuing research on Peloton recently.

Morgan Stanley analyst Nathan Feather lowered the investment firm’s price target on Peloton to $4 from $5.75 and affirmed an equal weight rating on the shares, according to The Fly. 

More Retail Stocks:

Sam’s Club making big new Costco-style membership changePopular online retailer suddenly shutting downFailing retail chain makes an unexpected comeback

MS is lowering estimates across the board for its North American internet stock coverage as it details macroeconomic and tariff impacts to e-commerce and digital ads.

On April 15, Bank of America analyst Curtis Nagle lowered the firm’s price target on Peloton to $9.50 from $11.50 while reiterating a buy rating on the shares.

The firm continues to believe Peloton can generate well over $400 million in earnings before interest, taxes, depreciation and amortization, compared with fiscal 2025 guidance of $325 million to $350 million. 

B of A maintained its estimates but lowered its price target, citing a lower market valuation.

Wall Street veteran cites Peloton’s cash flow

TheStreet Pro’s Stephen Guilfoyle is also adjusting his price target for Peloton.

The veteran trader, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said in his recent TheStreet Pro’s column that Peloton’s balance sheet was “not nearly as weak as many may believe.”

“As of the end of the December 2024 quarter, the firm had a cash position of $829 million and current assets of $1.308 billion,” Guilfoyle said “That included $257.8 million worth of inventories, whose value, especially in a weaker economy, could be considered questionable.”

He noted that current liabilities ended the period at $634.7 million, “including almost no short-term debt (that’s huge) and $80.7 million worth of unearned revenue (not a true financial liability).”

Total liabilities less equity came to $2.607 billion, including long-term debt of $1.489 billion.

“This is not an emergency, as all of the firm’s debt is long term in nature, but as we have discussed in the past, at some point this debt will have to be worked on,” Guilfoyle said. 

Related: Netflix stock has secret weapon amid trade war

“Thankfully, Peloton has had four consecutive quarters of positive free cash flows, which is how firms in this situation address issues such as this.”

Wall Street is expecting Peloton to report an adjusted loss of 6 cents per share on $621 million of revenue.

“On a year-over-year basis, this would indeed reflect a sales contraction of 13.5%,” he said.

“However, due to the firm’s efforts to improve its own fiscal discipline and shift from hardware to subscription services, that adjusted-earnings print would be an improvement from -$0.45 for the year-ago [comparison],” said Guilfoyle, who cut his price target to $8.25 from $10.

Related: Veteran fund manager who forecast S&P 500 crash unveils surprising update