Connected fitness specialist Peloton (NASDAQ:PTON) has already had quite a year, with shares up approximately 350% year to date as the COVID-19 pandemic has closed gyms and pushed fitness enthusiasts to find alternative ways to exercise at home. With many brick-and-mortar gyms going bankrupt amid the crisis, that trend may be here to stay.

Peloton may still have more upside in store, though, according to one Wall Street analyst.

Woman wearing workout clothes walking away from Peloton Bike while man standing next to it reaches towards the screen

Image source: Peloton.

A new Street-high price target

This week, Truist Securities boosted its price target on Peloton shares from $115 to $144, now the highest valuation estimate on the Street. The news came just a day after Baird increased its price target to $140 on Tuesday.

Analyst Youssef Squali reiterated his buy rating on the stock, citing a proprietary consumer survey that reinforces the idea that a "structural shift" has occurred in the fitness industry due to the coronavirus outbreak. As a leader in connected fitness technology, Peloton will be a "key beneficiary" of the trends.

Over half of the survey's respondents indicated that they have canceled or will cancel existing gym memberships, and that they plan to continue exercising at home even after COVID-19 is in the rearview mirror. Additionally, bikes are becoming more popular as a category among home exercise equipment, according to the analyst.

"Shelter-in-place practices have created the perfect environment for greater adoption of home exercise equipment, and for Peloton (#1 sought-after brand) through a combination of high quality products/service, easy financing, greater brand awareness and a strong logistics platform," Squali wrote in a research note to investors.

Looking ahead

Peloton has been reporting blistering triple-digit growth in recent quarters, including a 172% jump in revenue in its fiscal Q4, driven by a 113% increase in Connected Fitness Subscriptions. Digital-only memberships more than tripled.

The company has set an ambitious goal of reaching 100 million subscribers in the years ahead, with six key strategies to drive that effort. One initiative includes making its products more affordable, which will lean on the aforementioned logistics platform that will be crucial in facilitating equipment trade-ins that Peloton will proceed to resell under a forthcoming refurbished program. Peloton also recently expanded its product portfolio to make its hardware offerings more affordable.

Squali increased his estimates for fiscal 2021 and fiscal 2022 revenue to factor in higher adoption expectations. The analyst is modeling for $3.62 billion in revenue this fiscal year and $4.96 billion next fiscal year.

Peloton just finished its fiscal 2020 and issued guidance for fiscal 2021 that calls for revenue of $3.5 billion to $3.65 billion, which represents 96% growth at the midpoint. The company expects to finish the new fiscal year with 2.05 million to 2.1 million Connected Fitness subscriptions.

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.