BERLIN, GERMANY – JUNE 27: General view of the Peloton stores in Berlin on June 27, 2020 in Berlin, … [+]
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The sell-off in at-home fitness player Peloton stock stock continues. The stock has declined another 30% since our last update in early December and remains down by about 65% since early November after the company published weaker than expected Q1 FY’22 results and cut its full-year guidance, amid signs of cooling demand for its bikes and treadmills. Although daily Covid-19 cases in the U.S. have actually surged to all-time highs in recent weeks, a trend that should delay return to office plans and help at-home fitness stocks such as Peloton, investors appear to be sitting on the sidelines, given the broader shift out of pandemic-era winners and recent news that Peloton stock would be excluded from the Nasdaq-100.
So is the stock a buy at current levels? We think so. Peloton stock now trades at about $31 per share, or about 2x projected FY’23 revenues (fiscal years end June) roughly at levels seen in January 2020, before Covid-19 began spreading globally. However, the company has actually made considerable progress since then. For example, Peloton has grown its lucrative base of connected fitness subscribers almost 3x from pre-pandemic levels to around 2.5 million, while also expanding its addressable market via new deals and production capacity increases. The Peloton brand has also become a household name of sorts thanks to the pandemic. Despite the decline in guidance and slowing growth rates versus early pandemic quarters, Peloton still has a fair bit of runway. Peloton’s sales are projected to rise by around 12% this year, per consensus estimates, with growth likely to come in at about 25% in FY’23. Peloton’s international expansion is also just getting started, with the company also likely to see more opportunity in the commercial fitness space. We estimate Peloton’s Valuation to be around $50 per share which is about 60% ahead of the current market price.
Check out our analysis on Peloton Revenues: How Does Peloton Make Money for a closer look at Peloton’s business model, key revenue streams, and how they have been trending.
Below you’ll find our previous coverage of Peloton where you can track our view over time.
[12/8/2021] Peloton Stock Continues To Lag The Market. Is It Time To Buy?
Peloton (NASDAQ: PTON) stock remains down by about 18% over the …….
