Peloton Posts Gains on New Loop Capital Coverage

Peloton (NASDAQ:PTON) posted a 1.2% gain in premarket trading on the strength of new analysis from Loop Capital. Not only have those gains held into this morning's session, but the company has added further momentum and has surged up 5% in this morning's trading session as of this writing. The biggest cause of the gains can be traced back to new coverage from Loop Capital, which joins a litany of positive commentary out of the financial analyst sector.

Loop Capital's New Coverage Proves Helpful for Peloton

The new word out of Loop Capital calls Peloton a “buy”, and points to several factors behind the likely potential gains to come. Loop Capital noted that Peloton stock has declined around 40% since the highs seen back in January, which opens up a worthwhile potential buying window.

Some here might note that Peloton has had significant troubles with product recalls lately, but that is also a point Loop Capital addressed in its coverage. While Peloton shares have declined for the last five trading sessions running, Loop Capital—via its analyst Daniel Adam—suggests that the recall troubles are already part of the current share price. Adam noted that the recall is hitting the stock much more than it should be, and there are signs that Peloton's share price can rebound by 30% or potentially even more.

Further, Peloton is working to pull more users into the fold. Recently, it announced new pricing tiers that would see the app's cost decline for some users, in some cases, by fairly large proportions. Normally, the Peloton app costs $12.99 per month to access. Under the new pricing tiers, students will pay almost half that at $6.99, while first responders, healthcare workers, and teachers will pay $9.99. Military members and their families, meanwhile, will pay $9.99 per month as well, and that rate will never change for the life of the military member doing the signing up. Since Peloton's app doesn't specifically require a Peloton bike or Peloton treadmill to use, this opens up a new revenue stream that doesn't depend on the high-dollar purchase of a Peloton device.

What Are Other Financial Analysts Saying About PTON Stock?

While Loop Capital's new assessment of Peloton is no doubt welcome for investors—not to mention the company itself—our latest research reveals it's hardly the only such voice in the financial analyst field. In fact, Peloton stock has had a consensus “buy” rating since September 2019, when it shifted upward from a “hold” consensus.

Six months ago, Peloton had 23 “buy” ratings, three “hold” and one “sell” rating to its credit. Three months ago, that shifted to 24 “buy” ratings, two “hold” and two “sell.” Today, Peloton stands at 23 “buy” ratings, four “hold” and two “sell.” While there are gains in the “hold” sector, and even small gains in the “sell” side, it's clear the overwhelming majority still support buying in.

Peloton share price targets have had surprising volatility for the last six months. Six months ago, the consensus price target for Peloton stock was $124.89. That increased to $150.39 three months ago, but dropped to $139.74 a month ago. Today, it sits at $140.39, and represents nearly 30% upside potential, which is almost identical to Loop Capital's assessment.

Loop Capital's move represents a somewhat unusual development; it's the most positive development to hit for the company in months. The last time a company raised its price target on Peloton was back in February, when Rosenblatt Securities hiked the price target from $186 to $190 per share. May alone featured 13 separate analysts lowering their price targets on Peloton. Some reductions were comparatively minor; Wedbush, for example, tweaked its price target from its original $120 to $114, and Credit Suisse lowered its target from $164 to $152 per share. However, some cuts were far more drastic. Roth Capital, for example, lowered its target from $165 to $105 per share, and Argus went from $180 to $120 per share. Despite this, many analysts maintain a "buy" recommendation for Peloton stock.