On Monday, BofA Securities adjusted Peloton Interactive’s (NASDAQ:) financial outlook, reducing the company’s price target to $3.25 from the previous $4.00. Despite this adjustment, the firm maintained its Underperform rating on the stock.
Peloton, known for its interactive fitness products, is scheduled to report its third fiscal quarter 2024 earnings on May 2, before the market opens, followed by a conference call at 8:30 am ET.
BofA Securities anticipates the company’s revenue and net Connected Fitness subscribers to be roughly in line with Wall Street estimates, with a slight increase in revenue by 0.4% and a marginal decrease in subscribers by 0.1%. This projection accounts for weaker hardware sales, which may be slightly offset by Peloton’s rental and Fitness-as-a-Service (FAAS) programs.
In the second fiscal quarter of 2024, Peloton’s management highlighted better-than-expected demand for the Tread+ product, which could potentially aid cash flow as the company works to sell down its existing inventory.
Despite the introduction of new initiatives, such as a partnership with TikTok launched in January, the analyst expressed continued caution regarding subscriber growth, which has not yet shown signs of acceleration.
According to a CNBC report, Peloton removed its free tier subscription in April, a feature that was launched in May 2023 but failed to convert users into paid subscribers. Additionally, the company discontinued a co-branded collegiate program. The analyst suggests that if net subscriber growth remains stagnant, Peloton might consider further cost reductions in research and development (R&D) and general and administrative (G&A) expenses.
Peloton is also under pressure to achieve positive cash flow, which would likely be well-received by the market and improve the company’s position for refinancing its $1.7 billion debt. However, the analyst noted that a return to sustained user growth, combined with cost efficiency and the extension of debt maturities, would be necessary for a significant improvement in investor sentiment and the company’s share price.
remove ads
.
InvestingPro Insights
As Peloton Interactive (NASDAQ:PTON) braces for its upcoming earnings report, the InvestingPro platform provides a deeper look into the company’s financial health and market performance. With a market capitalization of $1.16 billion, the company’s financial situation appears…
Click Here to Read the Full Original Article at All News…
