Peloton (PTON): 5 Analysts Discuss Management Changes, Restructuring, and M&A Potential
Peloton (NASDAQ: PTON) is arguably the hottest topic among investors at the moment. Shares of the company are down nearly 90% off the all-time high before a relief rally has been staged on a potential M&A deal.
Moreover, the company announced that a senior tech executive Barry McCarthy will join as CEO, replacing founder John Foley. Capital expenditures will be slashed, including 2,800 corporate staff that is expected to leave.
Here’s what 5 top Street analysts have to say about recent developments at Peloton.
Susquehanna’s Dana Telsey (Market Perform, $40): “The restructuring plan and new CEO announcements are welcome news and have the ability to change the trajectory of Peloton by streamlining an organizational structure that quickly added too much fixed cost and bringing in an experienced and well-regarded CEO.”
Needham’s Bernie McTernan (Buy, $50): “The company reset the outlook for FY'23 and beyond by bringing in Barry McCarthy as the new CEO to replace founder John Foley, announced a $800M cost-cutting plan, and lowered revenue/growth expectations again. We continue to be bullish on the stock given PTON's valuable subscription revenue, which will flow through to adj EBITDA at a higher rate post opex cost cuts.”
UBS’ Arpine Kocharyan (Sell, $30): “Peloton is appointing an industry leader, with extensive financial/subscription business background and a track record of creditability and good rapport with investors. Our take on restructurings in general is that cost cutting is perhaps the easier part of the equation, and what is typically harder to figure out is demand and growth longer term.”
KeyBanc’s Edward Yruma (Overweight, $60): “We view the appointment of CEO Barry McCarthy as a strong positive for the business and believe that he will draw attention to the content component of the PTON story. $800M in cost reductions gives us confidence in a medium-term return to profitability, while still allowing for continued investments in content and new products. M&A is unlikely near term, in our opinion, but remains a viable consideration if a turnaround remains elusive.”
BofA’s Justin Post (Buy, $42): “Mr. McCarthy has extensive experience with subscription businesses as CFO of both Netflix and Spotify, and we think well suited to right-size Peloton for a post-pandemic environment. We expect a change in company focus from rapid growth and product expansion, to sustainable growth, which may include less aggressive marketing and fewer retail locations. Will probably take 2-3 more quarters to get expense reductions in place, and Mr. McCarthy looks well suited to help implement.”
Peloton stock price is down 1.5% in pre-open Wednesday.
By Senad Karaahmetovic | [email protected]