Peloton Interactive (PTON) Shares Currently Discount a 42% CAGR Through 2024, UBS is 'Less Constructive'

July 15, 2021 6:47 AM EDT
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Price: $104.92 -0.61%

Rating Summary:
    24 Buy, 7 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 8 | New: 9
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UBS analyst Eric Sheridan reiterated a Sell rating and $74.00 price target on Peloton Interactive (NASDAQ: PTON) on the belief that the Street expects Peloton to maintain a +42% CAGR in Connected Fitness subs in 2024E, implying close to 8.4% penetration of total addressable market.

The analyst believes a more realistic assumption is 7.7% household penetration in 2024 and sees high expectations baked into the current share price. He stated "The market is assuming roughly +38% CAGR for PTON through FY'23 vs. UBS at closer to +29-30%. We believe the market is ascribing higher growth to PTON's commercial opportunity and expansion into B2B channels (college campuses, hotels etc.), given acquisition of Precor and recent roll-out of corporate wellness offering, more than offsetting potentially slower roll-out of the new Tread product in the U.S. separately, consensus expects +31% of total subscriber CAGR over the same period to drive +41% increase in subs revenue. We believe this is further evidence that the market is assigning higher ASP growth to potentially B2B/commercial opportunities, such that 31% subscriber CAGR is expected to drive more than 10ppts higher subs revenue CAGR over the next 5 years." He went on to comment "We remain less constructive on the stock given: 1) slower sales CAGR expectation longer-term vs. what the market is implying; 2) Q4 outlook was lower even after adjusting back recall impact, which adds to near-term uncertainty on normalized demand curve post Covid."

For an analyst ratings summary and ratings history on Peloton Interactive click here. For more ratings news on Peloton Interactive click here.

Shares of Peloton Interactive closed at $113.36 yesterday.

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