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Peloton Interactive Inc (NASDAQ:PTON) shares rose in trading on Friday, after the company reported upbeat quarterly sales.
The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.
Analyst Paul Golding maintained a Neutral rating while raising the price target from $2.53 to $4.90.
"The company beat across most major metrics, delivering top-line growth for the first time in years," Golding said in a note. He added, however, that paid subscribers of 2.98 million fell 2% sequentially, with churn rose from 1.2% to 1.9%, more than expected.
Management expects gross margins to expand on "HW margin expansion and mix shift towards Subscriptions," the analyst stated. "Despite cost-out execution, uncertain rev outlook coupled with CEO search still underway may remain an overhang," he further wrote.
Analyst Doug Anmuth had a Neutral rating while slashing the price target from $7 to $6.
"Peloton generated positive Adj. EBITDA & FCF for the second consecutive quarter & expects $200M+ annualized cost savings in FY25 from its restructuring program & more efficient media spend," Anmuth said.
The connected fitness industry continues to decline on a year-on-year basis, with macro pressures weighing on demand, the analyst stated. Consequently, management issued a full-year revenue guidance that was softer than expected "as it factors in Y/Y declines in hardware sales, macro headwinds, pullback in marketing spend, & higher Y/Y CF monthly churn," he added.
Check out other analyst stock ratings.
Analyst Curtis Nagle maintained an Underperform rating and price target of $3.25.
The company reported revenues of $644 million, beating Street estimates of $627 million, and EBITDA of $70.3 million, surpassing consensus of $49 million, Nagle said. The beat was "largely driven by higher gross margin and lower S&M spend," he added.
Peloton Interactive announced a churn rate of 1.9%, higher than Street expectations of 1.7%, the analyst stated. Management projected negative free cash flows for the fiscal first quarter "but guided to at least $75mn FCF for FY25," he further wrote.
Analyst Bernie McTernan reaffirmed a Hold rating on the stock.
Management is now "clearly more focused on optimizing margins than growth," McTernan said.
"Ultimately, incrementally focusing on profitability, along with the recent refi, is a positive for liquidity concerns which has been a significant focus for investors," the analyst wrote. He added, however, that Peloton Interactive could deliver "two more years of revenue declines which ultimately weakens the long-term opportunity for the company."
PTON Price Action: Shares of Peloton Interactive had risen by 4.73% to $4.76 at the time of publication on Friday.
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Courtesy: Peloton
Posted In: PTON
