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Why Peloton Stock Jumped Today

By Joe Tenebruso – Aug 18, 2020 at 1:28PM

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Analysts are growing more bullish on the fitness equipment company's growth prospects. Here's why.

What happened

Shares of Peloton Interactive (PTON 0.80%) climbed on Tuesday, following bullish analyst remarks. As of 1:10 p.m. EDT, Peloton's stock was up more than 7%.

So what 

Stifel analyst Scott Devitt reiterated his buy rating on Peloton's shares and boosted his price forecast from $62 to $72. His new target price represents potential gains for investors of roughly 10% from Peloton's closing price on Monday and about 3% from their current price near $70.

A woman is exercising on a Peloton bike while watching a digital fitness class.

Peloton's equipment is growing increasingly popular among fitness fans. Image source: Peloton Interactive.

As COVID-19 drives more people to work out in the comfort and safety of their own homes rather than at crowded gyms, Peloton will benefit, according to Devitt. He expects a rising number of fitness enthusiasts to invest in high-quality exercise equipment -- including Peloton's bikes and treadmills -- as they construct their home gyms. 

Now what

Peloton is well positioned to benefit from the trend toward home-based fitness. Despite the high cost of its machines -- its exercise bike and treadmill sell for $2,245 and $4,295, respectively -- Peloton's sales are booming. Its revenue surged 66%, to $524.6 million, in the third quarter. 

Moreover, Peloton is reportedly seeking to expand its addressable market by offering a more affordable treadmill, in order to bring even more people into its growing customer ranks. A new product launch could help to drive the home-based fitness leader's sales -- and by extension, its stock price -- higher in the years ahead.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Peloton Interactive. The Motley Fool has a disclosure policy.

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