DJ Hot Research: Peloton Stock Is Under Pressure as UBS Says to Sell -- Barrons.com
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By Connor Smith
Peloton Interactive shares are falling after an analyst at UBS said the time has come to sell the stock, a winner in the stay-at-home era.
UBS analyst Eric Sheridan lowered his rating on Peloton stock (ticker: PTON) to Sell from Neutral in a research note on Monday, though he raised his price target to $124 from $115. He said that while he is still positive about the maker of high-end exercise bikes' long-term prospects, losses for the stock are becoming more likely than gains.
A Peloton representative didn't immediately offer comment on the downgrade.
The stock has more than doubled over the past six months, a gain that Sheridan says indicates investors are already pricing in "robust product sales growth, subscriber growth, & market leadership amid Covid-19" despite increasing competition.
The share price also reflects a high degree of confidence that the company can report near-term operating results that are substantially better than expected, he said, even though the figures will be compared with those from 2020, when pandemic-related demand was lifting sales.
The logistical challenges of meeting that demand are another challenge for the company. Over the holiday season, the shipping window for Peloton's base bike ballooned to four to eight weeks, while its Bike+ offered delivery windows of 10-plus weeks. In December, the company said it was buying fitness provider Precor for $420 million from Amer Sports to improve its manufacturing capacity.
Sheridan says the market may be overestimating the impact of the deal, "with the view that it could potentially expand Peloton's business into B2B/commercial channels such as hospitality, corporations, and college/university campuses."
It is a bit of a contrarian call. Of the 27 analysts tracked by FactSet who cover the stock, 23 rae it at Buy or the equivalent. The mean target for the stock price is $152.36, according to FactSet.
Shares were down 5.4% to $149.36 on Tuesday, while the S&P 500 index was up 0.4%.
Write to Connor Smith at connor.smith@barrons.com
(END) Dow Jones Newswires
January 19, 2021 12:16 ET (17:16 GMT)
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