TD Cowen Maintains Hold Rating on Peloton Ahead of Q4 Earnings Report

• Goldman Sachs upgraded Peloton Interactive Inc. (NASDAQ:PTON) from Neutral to Buy, indicating growing confidence in the company's strategic direction and financial performance.
• Peloton reported a surprise profit in its fourth-quarter earnings, with a significant improvement in equipment gross margin from 8.3% to 17.6%, and subscription gross margin from 68% to 72%.
• The company's focus on streamlining operations and shifting towards high-margin subscription sales is starting to pay off, despite a volatile trading session following the earnings call.

Peloton Interactive Inc. (NASDAQ:PTON) is a prominent player in the connected fitness industry, known for its innovative exercise equipment and subscription-based fitness classes. On August 7, 2025, Goldman Sachs upgraded Peloton from a Neutral to a Buy rating, with the stock priced at $7.11. This upgrade reflects growing confidence in Peloton's strategic direction and financial performance.

Peloton's recent trading session was marked by volatility, with the stock initially surging by 14% before declining by 1% by noon ET. This fluctuation followed the company's fourth-quarter earnings call, where Peloton reported a surprise profit, surpassing analysts' expectations. Despite a 6% decline in sales, the company managed to increase its gross profits by 5%, showcasing its ability to navigate challenging market conditions.

A key factor in Peloton's potential turnaround is its focus on streamlining operations. This strategy has led to a significant improvement in the company's financial metrics. Over the past year, Peloton's equipment gross margin more than doubled from 8.3% to 17.6%, while the gross margin for its subscriptions segment increased from 68% to 72%. This shift towards more profitable segments is evident as high-margin subscription sales now make up two-thirds of Peloton's revenue.

The stock's recent performance reflects these positive developments. Peloton's market capitalization is approximately $2.72 billion, with a trading volume of 43.97 million shares. The stock has fluctuated between a low of $6.84 and a high of $8.03 during the day, and over the past year, it has ranged from a high of $10.90 to a low of $2.83. Despite the challenges, Peloton's strategic focus on profitability and operational efficiency is gaining traction, as highlighted by Goldman Sachs' recent upgrade.

Peloton Interactive (NASDAQ:PTON) gained more than 4% intra-day today after Truist Securities upgraded the stock to Buy from Hold, setting a new price target of $11.00, as analysts see the fitness company nearing a critical turning point after years of struggles.

The firm highlighted that more than three years after its initial downgrade, Peloton’s fundamentals have notably improved. With the balance sheet strengthened and operating expenses significantly reduced, the company is positioned to maintain consistent free cash flow profitability. New leadership is also shifting focus back to revenue growth, which Truist expects to pick up meaningfully in fiscal 2026.

A key part of the bullish case is Peloton’s business mix: subscriptions now contribute roughly two-thirds of total revenue, helping to stabilize margins and improve overall profitability. Valuation metrics, currently at 1.4 times sales and 10.3 times adjusted EBITDA, are seen as “washed out,” suggesting the stock is largely de-risked at current levels.

Looking to near-term catalysts, Truist believes Peloton’s fiscal third-quarter results, scheduled for May 8, could show revenue tracking slightly above consensus based on internal card data.

The upgrade reflects growing confidence that Peloton is entering a more sustainable phase of recovery after a prolonged period of restructuring and market skepticism.

Peloton Interactive (NASDAQ:PTON) gained more than 4% intra-day today after Truist Securities upgraded the stock to Buy from Hold, setting a new price target of $11.00, as analysts see the fitness company nearing a critical turning point after years of struggles.

The firm highlighted that more than three years after its initial downgrade, Peloton’s fundamentals have notably improved. With the balance sheet strengthened and operating expenses significantly reduced, the company is positioned to maintain consistent free cash flow profitability. New leadership is also shifting focus back to revenue growth, which Truist expects to pick up meaningfully in fiscal 2026.

A key part of the bullish case is Peloton’s business mix: subscriptions now contribute roughly two-thirds of total revenue, helping to stabilize margins and improve overall profitability. Valuation metrics, currently at 1.4 times sales and 10.3 times adjusted EBITDA, are seen as “washed out,” suggesting the stock is largely de-risked at current levels.

Looking to near-term catalysts, Truist believes Peloton’s fiscal third-quarter results, scheduled for May 8, could show revenue tracking slightly above consensus based on internal card data.

The upgrade reflects growing confidence that Peloton is entering a more sustainable phase of recovery after a prolonged period of restructuring and market skepticism.

Peloton Interactive, Inc. (NASDAQ:PTON) saw its shares surge more than 24% intra-day today after delivering stronger-than-expected fourth-quarter results and marking its first return to revenue growth in two years.

The fitness equipment maker posted a narrower-than-expected loss of $0.08 per share, beating analyst projections of a $0.17 loss. Revenue reached $643.6 million, surpassing the consensus estimate of $628.47 million and showing a modest 0.2% year-over-year increase.

Peloton’s subscription business played a pivotal role, with revenue rising 2.3% year-over-year to $431 million. The company also reported improved profitability, with Adjusted EBITDA of $70 million, up $105 million from the prior year.

However, Peloton’s outlook for Q1 and full fiscal year 2025 fell short of expectations. The company projected Q1 revenue between $560 million and $580 million, lower than the $602 million consensus, and full-year revenue of $2.4 billion to $2.5 billion, below the expected $2.69 billion.

Despite the softer guidance, investors were encouraged by Peloton’s return to growth and enhanced profitability, as well as the company’s progress in cost-cutting efforts, which included $15 million in savings during Q4 from its restructuring plan.

Peloton Interactive, Inc. (NASDAQ:PTON) saw its shares surge more than 24% intra-day today after delivering stronger-than-expected fourth-quarter results and marking its first return to revenue growth in two years.

The fitness equipment maker posted a narrower-than-expected loss of $0.08 per share, beating analyst projections of a $0.17 loss. Revenue reached $643.6 million, surpassing the consensus estimate of $628.47 million and showing a modest 0.2% year-over-year increase.

Peloton’s subscription business played a pivotal role, with revenue rising 2.3% year-over-year to $431 million. The company also reported improved profitability, with Adjusted EBITDA of $70 million, up $105 million from the prior year.

However, Peloton’s outlook for Q1 and full fiscal year 2025 fell short of expectations. The company projected Q1 revenue between $560 million and $580 million, lower than the $602 million consensus, and full-year revenue of $2.4 billion to $2.5 billion, below the expected $2.69 billion.

Despite the softer guidance, investors were encouraged by Peloton’s return to growth and enhanced profitability, as well as the company’s progress in cost-cutting efforts, which included $15 million in savings during Q4 from its restructuring plan.

TD Cowen analysts maintained a Hold rating and $3 price target on Peloton Interactive (NASDAQ:PTON), ahead of the company’s upcoming fiscal Q4 results on August 22.

The analysts expect a sequential decline in revenue due to seasonality, though margins are anticipated to improve, driven by a shift away from hardware and the benefits of restructuring efforts. The analysts project year-over-year declines in both units and revenue, though performance is expected to improve sequentially. Connected Fitness subscriptions are forecasted to show a slight year-over-year decline as well.

While management’s outlook aligns with Blackledge's revenue and EBITDA estimates for fiscal Q4, the analysts also noted that their long-term estimates were slightly lowered as they rolled their discounted cash flow (DCF) model forward to 2025.