Please ensure Javascript is enabled for purposes of website accessibility

Analyst Slashes Peloton Price Target 33% Over Treadmill Recall

By Rich Duprey - May 21, 2021 at 8:16AM

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

But he still thinks the home fitness leader is a long-term buy.

Peloton Interactive (PTON -2.16%) is going to feel the effect of its treadmill recall financially, an analyst believes, but the growth of the at-home fitness trend will do a lot to soften the blow.

Still, he just slashed his price target on the manufacturer of home fitness equipment from $180 per share to $120, even as he maintained his buy rating on the stock.

Female Peloton instructor running on a treadmill

Image source: Peloton Interactive.

Argus Research analyst John Staszak told investors in a research note that because Peloton's Tread+ treadmill was implicated in the death of a child and dozens of injuries, it's going to face substantial product liability issues.

There was also a second recall involving its lower-cost Tread device over the possibility of the touchscreen detaching during use and creating the risk of injury, though no such accidents have been reported.

These issues will weigh on Peloton's stock price, though it has already regained the ground it lost in the aftermath of the news. Staszak's target also implies there is 20% more upside to the stock from its current $100 level.

That's likely due to the robustness of the at-home fitness trend because consumers discovered during the pandemic that they preferred working out at home instead of going to the gym. That should help Peloton Interactive cycle past the recall issue, and he sees the long-term potential of its brand remaining strong.

Peloton just issued a software update to its treadmill that adds a "locking" feature to the equipment by shutting it off after 45 seconds of non-use. A four-digit code will then need to be entered to activate it again.

About 125,000 treadmills were recalled, and Peloton is offering refunds for those who want them. Or it will pay to have the device moved to a more secure location in the home.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Peloton Interactive. The Motley Fool has a disclosure policy.

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.
PTON
$12.66 (-2.16%) $0.28

*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 analyst team.

Stock Advisor Returns
394%
 
S&P 500 Returns
127%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

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.