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

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.

Peloton (NASDAQ:PTON) initially saw a rise in its stock price on Thursday after announcing cost-cutting measures and changes in leadership, but later experienced a decline of more than 10% intra-day today. The fitness company reported a third-quarter adjusted loss per share of $0.45, missing analyst expectations by $0.09. Revenue was almost in line with estimates, reaching $717.7 million compared to the expected $718 million.

The revenue marked a decline from the $936.9 million reported in the same quarter last year, highlighting a challenging period for Peloton. The company announced aggressive cost-cutting measures, including a global workforce reduction of around 15% (approximately 400 employees) and the announcement of CEO Barry McCarthy's resignation.

Peloton's restructuring efforts aim to align costs with its current business size and achieve over $200 million in annual expense reductions by the end of the 2025 fiscal year, with a focus on maintaining sustained positive free cash flow. The company reported its first positive free cash flow in more than three years, marking a significant milestone in its turnaround efforts.

For the fiscal year 2024, Peloton revised its revenue guidance to a range of $2.68 to $2.7 billion, which is slightly below the analyst consensus of $2.71 billion. This adjustment reflects current demand trends and anticipates a seasonal decline in demand in the fourth quarter.