Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Peloton Stock Rode to an All-Time High Today

By Evan Niu, CFA - Jan 13, 2021 at 1:13PM

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

Bank of America Securities boosted its price target on the connected fitness company's shares.

What happened

Shares of Peloton ( PTON -2.43% ) shot up by more than 8% to touch a new all-time high of $169 a share on Wednesday, and was still up by 7% as of 12:30 p.m. EST. The share price gains came after the connected fitness company got a vote of confidence from a Wall Street analyst: Bank of America Securities' Justin Post boosted his price target on Peloton shares from $150 to $175 while reiterating his buy rating.

So what

Post noted that monthly visits to the company's website soared by 167% year over year in December, and also rose on a month-over-month basis. That surge suggested heightened demand for Peloton's home exercise equipment.

Man riding a Peloton Bike at home

Image source: Peloton.

Peloton continues to struggle to meet that demand, which outstrips supply by a considerable margin. As of Jan. 6, the company was still quoting delivery times of up to 10 weeks for its Bike, Bike+, and Tread+. With such a high order backlog, Peloton's "biggest near-term guidance risk remains supply," according to Post.

Now what

However, the analyst is optimistic that the consumer discretionary company's supply situation will continually improve throughout fiscal 2021, as a new factory capable of producing 1.5 million units was expected to have started production in December. Additionally, Peloton announced in December that it was acquiring Precor for $420 million, which will add a U.S. manufacturing base to the company's operations.

The Bank of America analyst also believes that products currently in Peloton's pipeline will help it boost growth further, but that the company will face some difficult year-over-year comparisons in 2021 to the astronomical growth that it enjoyed during 2020 due to the COVID-19 pandemic.

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.

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, Inc. Stock Quote
Peloton Interactive, Inc.
$42.49 (-2.43%) $-1.06

*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 service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

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

Our Most Popular Articles

Premium Investing Services

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