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Why Peloton Interactive Is Rising Today

By Rich Duprey – Updated Jun 23, 2020 at 11:28AM

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The connected home fitness leader has hit its stride during the global pandemic.

What happened

Shares of Peloton Interactive (PTON -0.93%) were jumping 5.5% higher in early morning trading Tuesday after a Stifel analyst raised his price target on the home fitness leader 13% to $62 from $55 per share. 

A Cowen analyst followed suit this morning, raising his price target 30% to $70 from $54 per share.

Woman riding a stationary bike

Image source: Peloton Interactive.

So what

The price forecasts come because of how consumers are viewing fitness routines during the COVID-19 pandemic.

In a note to investors, Stifel analyst Scott Devitt wrote, "Shifting consumer behavior, gym closures, social-contact avoidance and steady demand from word-of-mouth have the potential to fuel multiple quarters of holiday-like demand."

He also believes it will accelerate Peloton's margin expansion potential by two to three years.

Now what

Peloton Interactive had closed on Monday at just about $53 a share, meaning Wall Street saw upside potential for the stock of between 17% and 32% because of what Stifel called "holiday-like demand" for its products.

While the connected fitness company makes pricey, high-end stationary bikes and treadmills, it also offers stand-alone streaming fitness classes that last month topped 1 million subscribers, about double the number it had a year ago.

With out-of-home gyms like 24 Hour Fitness filing for bankruptcy and closing locations, while others such as Planet Fitness (PLNT -2.77%) navigate how to do social distancing in their gyms, the simplicity of exercise in your living room is looking appealing to more people.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Peloton Interactive and Planet Fitness. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Peloton Interactive, Inc. Stock Quote
Peloton Interactive, Inc.
$8.51 (-0.93%) $0.08
Stifel Financial Corp. Stock Quote
Stifel Financial Corp.
$54.43 (-3.90%) $-2.21
Cowen Inc. Stock Quote
Cowen Inc.
$38.45 (0.00%) $0.00
Planet Fitness, Inc. Stock Quote
Planet Fitness, Inc.
$55.88 (-2.77%) $-1.59

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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