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Peloton Could Shoot Almost 20% Higher, According to This Analyst

By Eric Volkman - Feb 1, 2021 at 8:37PM

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One prognosticator feels the company's pandemic-fueled growth story is far from over.

A durably popular stock through the stay-at-home days of the coronavirus pandemic, Peloton Interactive (PTON -7.27%) still has quite a runway for profit. That's according to Cowen analyst John Blackledge, who substantially raised his price target on the stock in a research note published Monday.

The prognosticator now believes the shares of the home exercise equipment and video services company are worth $175 apiece, up from his previous level of $130. The former, if reached, would represent a 19% gain on the most recent closing stock price.

Peloton user during a class.

Image source: Peloton Interactive.

He wrote that his long-tail bullishness on the stock should continue as "as Connected Fitness [subscriptions] and engagement ramp [up], further helped by ongoing demand surge amid the pandemic (current bike delivery time in [the] U.S. is approx. 8-10 weeks), alongside [operating expenses] efficiencies."

Peloton inarguably continues to show very robust growth. In its most recently reported quarter, the company managed to grow its all-important subscription revenue from its online video exercise classes by 133% year over year. While operating expenses are still on an upward slope, they rose 66%, a fairly modest rate compared to that revenue trajectory.

While the Cowen analyst conceded that Peloton stock trades at a bit of a premium on an enterprise value-to-sales basis compared to other subscription-reliant companies, he feels this is justified given its still-considerable growth prospects.

Peloton is slated to release its second quarter of fiscal 2021 results this Thursday, Feb. 4.

Despite the analyst's enthusiasm, Peloton stock lagged behind the broader market on Monday, closing only 0.5% higher against the S&P 500 index's 1.6% rise.


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