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Peloton Stock Will Surge 30% to $59, According to This Analyst

By Joe Tenebruso - May 13, 2020 at 3:56PM

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The exercise equipment maker's shareholders could be in store for handsome gains.

Even after surging 60% over the past month, plenty of gains still lie ahead for Peloton Interactive's (PTON -2.86%) investors.

So says JMP Securities analyst Ronald Josey, who boosted his target price on Peloton's stock to $59, up from his prior forecast of $53. Josey also reiterated his market outperform rating on the stock, following the exercise equipment maker's strong third-quarter results.  

"Peloton announced it surpassed 1 million net CF [connected fitness] subscribers at a rate significantly faster than we had expected, reinforcing our belief that consumer fitness behavior is fundamentally changing due to COVID-19 and that Peloton is well-positioned to benefit as demand continues to accelerate," Josey said. 

A woman riding a Peloton exercise bike while watching an exercise class on a digital screen.

JMP Securities analyst Ronald Josey says surging subscriber counts could send Peloton's stock sharply higher. Image source: Peloton.

Josey expects Peloton to benefit from gym closures during the coronavirus pandemic. He estimates that 90 million gym members have been affected by closures in Peloton's core markets. 

The COVID-19 crisis could also make many fitness enthusiasts reconsider going to gyms even after they reopen, for fear of being infected with the novel coronavirus. Judging by Peloton's stellar sales growth -- revenue soared 66% year over year, to $524.6 million in the third quarter -- many people are instead choosing to invest in fitness equipment so they can work out at home.

Josey also said that Peloton is benefiting from word-of-mouth advertising, as happy customers recommend its offerings to their friends and family. This could help Peloton keep a lid on marketing expenses, thereby boosting its future profitability.

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