The supply chain woes that have dogged Peloton Interactive (PTON -1.49%) during the COVID-19 pandemic are apparently easing, as negative customer comments on the Better Business Bureau's website are down "significantly."
MKM Partners analyst Rohit Kulkarni says that means the 34% plunge the home fitness equipment maker's stock has suffered makes Peloton an "attractive" buying opportunity, though he maintains his $130 per share price target.
Overwhelming demand for Peloton's connected treadmills and exercise bikes swamped the equipment maker as consumers began working out at home after gyms were forced to close during the coronavirus outbreak.
Yet the pandemic upset supply chains across many industries, and Peloton was unable to source enough equipment from its manufacturers in China. Last quarter it said congestion at ports had delayed shipments five times longer than usual.
Peloton subsequently expanded its manufacturing capabilities in the U.S. and also acquired Precor, a fitness equipment maker for the commercial market that would help it meet existing demand.
Kulkarni says consumer posts on the BBB.org website about the company are down substantially from when Peloton was telling customers shipment delays would be months instead of weeks. It suggests the improvements it's made to the supply chain are having a positive impact.
He is also hopeful about the national rollout of Peloton's new lower-cost treadmill called Tread, as well as the effect Precor will have on its chances of entering the market for equipment sold to hotels, gyms, and corporations.
Peloton's stock closed last Friday at $105 per share, meaning Kulkarni still sees 22% upside in the shares.