KeyBanc Stretches Peloton Price Target On At-Home Exercise Opportunity

Peloton Interactive, Inc. (NASDAQ: PTON) shares spiked Wednesday after a KeyBanc Capital Markets analyst raised their price target on the stock.

The Peloton Analyst: Edward Yruma maintained an Overweight rating on Peloton with a price target lifted from $55 to $70.  

The Peloton Thesis: Many fitness boutiques are severely limited due to social distancing as a result of the coronavirus pandemic, which could potentially increase demand for the at-home equipment, Yruma said in a Wednesday note. (See his track record here.)

"SoulCycle (>90 locations) has reopened eleven of its markets as of June 23. Our checks point to much lower class counts (up to a 50% reduction)."

Peloton's delivery time, which is seven to 11 weeks, sets the company up for strong bookings in the first quarter of fiscal year 2021, the analyst said. 

"Despite higher product levels, we think there is still significant unfulfilled demand for the Peloton bike. Delivery lead times have yet to fall in a meaningful way, which points to strong bookings for F1Q21," he said. 

Yruma said he sees long-term opportunitites for Peloton's lower-priced trend.

"We believe that the product will be in the ~$2,500 range (vs. $4,295) and is likely to have a smaller footprint, which should meaningfully expand its market opportunity."

PTON Price Action: Peloton shares were down 1.06% at $54.30 at the time of publication Wednesday. The company set a new 52-week high of $57.25 and has a 52-week low of $17.70.

Photo courtesy of Peloton.