Peloton Interactive shares have gotten a pandemic boost, rising about 13% for the year through Friday, as the homebound search for workout options other than gyms and health clubs.
The company’s March quarter earnings, due after the close of trading Wednesday, will provide some fresh data on how the seller of high-end connected stationary bikes has fared in the current downturn. Wall Street is clearly feeling optimistic .
Before the onset of the pandemic, Peloton (ticker: PTON) forecast revenue for the quarter of $470 million to $480 million, a range whose midpoint is about 50% above the year-earlier figure. The company predicted an adjusted loss of $25 million to $35 million in terms of earnings before interest, taxes, depreciation, and amortization, and 843,000 to 848,000 subscribers.
Wall Street thinks the revenue estimates are too low. The consensus forecast is $487 million in revenue, and projections run as high as $525 million. The Street expects a loss for the quarter of 17 cents a share.
For the June 2020 fiscal year, Peloton has projected revenue of $1.53 billion to $1.55 billion, an adjusted Ebitda loss of $95 million to $115 million, and 920,000 to 930,000 paid subscribers. The Street consensus for the fiscal year is for revenues of $1.56 billion and a loss of $1.03 a share.
For the June quarter, analysts expect revenue of $380.3 million with a loss of 20 cents a share.
On Monday, MKM Partners analyst Rohit Kulkarni repeated his Neutral rating and $28 price target on the stock. Shares were up 4.9% to $33.62 in afternoon trading.
The coronavirus crisis, which has forced the temporary closing of many places where people work out, has pulled forward demand from future quarters, he said.
Kulkari added that “several recent developments add to potential volatility and range of outcomes at Peloton: store and studio closures, 90-day free trials of digital-only offerings, delayed and/or canceled bike shipments, and the economic impact of settlement of recent lawsuits [the company in the quarter settled disputes with both the National Music Publishers Association and with Flywheel Sports].”
He also noted that the last two earnings reports turned into short- term “sell the news” events for Peloton shares.
JMP Securities analyst Ronald Josey is more upbeat on the outlook. Last week, he repeated his Market Outperform rating, lifting his price target to $43, from $41.
He said “engagement and demand for Peloton are accelerating,” based on his own tracking of Peloton classes, extended shipment times for new orders, app downloads, and other factors.
“With stay-at-home orders across most of the country and most gyms and studios closed, we believe Peloton is seeing an acceleration of longer-term tailwinds as consumers adopt more home-fitness solutions,” he wrote. “Our engagement analysis, rise in app store rankings, and extended delivery times - now at 8+ weeks for guaranteed delivery - highlights greater overall engagement … with Peloton’s 30-day home trial and flexible financing options - making Peloton less expensive than many gyms and studios - we believe the company can continue to benefit from this surge in demand.”