The stock of Peloton Interactive (PTON) is up 17% on July 30 following a bullish report on the company from analysts at Swiss banking giant UBS Group (UBS).
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UBS is urging investors to buy PTON stock ahead of the internet-connected fitness company’s fourth-quarter financial results. In a note to clients, UBS upgraded Peloton to Buy from neutral and lifted its price target on the shares to $11 from $7.50 previously.
UBS said it upgraded PTON stock on expectations for revenue growth driven by price increases and improving user trends. The note from UBS sent Peloton’s share price soaring 17% higher in afternoon trading as investors clamor to buy the stock ahead of the company’s next earnings print on Aug. 7.
Price Hikes
UBS estimates that Peloton will pursue an 11% to 12% price increase for its monthly connected fitness subscriptions, which could drive $90 million of new revenue at the company. Consensus estimates call for subscription revenue to decline in the current fiscal year, implying Wall Street hasn’t priced in the forecasted monthly fee increases that UBS anticipates.
If UBS is correct about the price increases, then the maker of treadmills and exercise bikes that are connected to the internet may provide better-than-expected profit guidance when it reports its Fiscal fourth-quarter results. Heading into the print, PTON stock has more than doubled from its 52-week low.
Is PTON Stock a Buy?
The stock of Peloton Interactive has a consensus Moderate Buy rating among 11 Wall Street analysts. That rating is based on five Buy and six Hold recommendations issued in the last three months. The average PTON price target of $8.50 implies 37.54% upside from current levels.
