Please ensure Javascript is enabled for purposes of website accessibility

Why Peloton Stock Rose Today

By Joe Tenebruso – Aug 27, 2020 at 5:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The fitness equipment leader has a larger growth opportunity than you think.

What happened

Shares of Peloton Interactive (PTON 0.30%) climbed 4.5% on Thursday after Goldman Sachs analyst Heath Terry argued that investors' expectations for the home-based fitness company were "far too low." 

So what 

Terry reiterated Goldman's buy rating on Peloton's stock and boosted his price forecast from $84 to $96. His new target price represents potential gains for shareholders of roughly 37%, based on Peloton's closing price of $70.30.

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

Sales of Peloton's fitness machines are booming. Image source: Peloton.

Terry believes investors are drastically underestimating Peloton's growth potential. He sees the company's massive backlog of orders as not just a short-term bump in demand during the coronavirus pandemic, but rather evidence of a long-term shift in how people exercise.

Now what 

Even if a COVID-19 vaccine is developed, many people will likely continue to work out in the comfort and safety of their own homes -- particularly those who have already started to invest in fitness equipment during the pandemic. This home-based fitness trend is fueling demand for Peloton's exercise bikes and treadmills, and it's likely to continue to do so well into the future. For these reasons, many investors are likely underestimating Peloton's long-term growth prospects, and its stock could certainly ascend toward Goldman's target price in the coming year.

 

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Peloton Interactive Stock Quote
Peloton Interactive
PTON
$10.06 (0.30%) $0.03

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.