Please ensure Javascript is enabled for purposes of website accessibility

Peloton's 34% Plunge Is a Buying Opportunity as Customer Complaints Ease, Says Analyst

By Rich Duprey - Mar 8, 2021 at 10:38AM

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

New product introductions and new market opportunities also make for a bullish outlook.

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.

Man running on a connected treadmill

Image source: Peloton Interactive.

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 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.


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.
$14.51 (-1.49%) $0.22

*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 05/20/2022.

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.