Investors sweating out Peloton's (NASDAQ:PTON) fiscal second-quarter results this week may still be wondering if the leader of high-end workouts is working out. Peloton posted its financial update after Wednesday's market close, and while the shares initially moved lower on the report, there are at least two Wall Street pros who can't seem to see eye to eye as to where Peloton stock goes from here.

BMO Capital analyst Simon Siegel is lowering his price target from $27 to $26 following the fresh financials. Peloton's numbers beat Wall Street expectations, but its guidance for the current quarter did not impress. Siegel is also concerned that users will trade down to Peloton's cheaper digital subscription offering. He is sticking with his neutral "market perform" rating, but the new $26 price goal is well below both Wednesday's close of $32.70 and September's IPO price of $29. In short, Siegel sees a broken IPO in the making. 

At the other end of the spectrum, Youssef Squali at SunTrust is boosting his price target from $30 to $37. He concedes that Peloton's guidance calling for 50% top-line growth in the current quarter is light, but he feels that the sharply decelerating revenue isn't as shocking when you consider that Peloton's fiscal third quarter is being stacked up against a 122% growth spurt a year earlier. He sees a company scoring significant margin leverage at this point as it executes on lifting the visibility of its brand and offers innovative and easy financing strategies to get more sweat seekers onto its platform. 

A Peloton stationary bike with a workout playing on the monitor.

Image source: Peloton.

Plucking out the pedals 

There's no denying that the platform's popularity is growing quickly. There were 712,005 connected fitness subscribers for its treadmills and stationary bikes at Peloton at the end of December, well ahead of the 562,774 on its books just three months earlier and a 96% pop over the past year. Total memberships have now hit 2 million accounts. Revenue itself rose only 77% to $466.3 million, but that's not as problematic as it may seem. Product sales that account for a larger share of the revenue during the holiday shopping season rose 72%. Subscription revenue actually more than doubled. 

Peloton works. Once people decide to make that initial purchase -- either paid up front, financed easily over several months, or via the 30-day home trial offer -- they tend to stick around. Despite that 92% of its subscribers pay month to month, Peloton's average monthly churn rate on the connected fitness front stands at a reasonable 0.74% with a 12-month retention rate of 93%.

Engagement is everything at Peloton. The average connected fitness subscriber is logging in 12.6 monthly workouts, up from 9.7 a year earlier. Peloton may have stirred up some notoriety during the holiday shopping season for its over-the-top marketing campaign, but its message landed where it had to with its target audience in scoring broader brand awareness.

Guidance isn't ideal. The $470 million to $480 million that it's targeting for the fiscal third quarter -- 50% growth at the midpoint -- is barely a sequential uptick on the low end. However, Peloton still expects to have 920,000 to 930,000 connected fitness subscribers by the end of June. The base is growing. Engagement is trending higher. Peloton's going to be volatile. That's par for the course when it comes to investing in IPO stocks. However, it's hard to bet against the platform's momentum. The mixed financial results will get punished in today's unforgiving market, but Peloton's only going to get bigger in the coming months, and the stock should eventually follow suit.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.