Bernstein: it’s time to buy this butchered exercise equipment stock


Finally, it’s time to buy Peloton Interactive Inc (NASDAQ: PTON) shares, says Bernstein analyst Aneesha Sherman. The pandemic darling has been butchered over the past 15 months, now down more than 85% from its high in December 2020.  

Sherman started Peloton stock with an ‘outperform’ rating

Sherman started Peloton with an “outperform” rating on Tuesday and a price target of $40 a share that represents a 75% upside from here.

Last month, Peloton named Barry McCarthy its new CEO but Sherman has reasons that go beyond new management for the bullish call. On CNBC’s “Closing Bell”, she said:

It’s more about the fact that Peloton still has a core healthy business. It has extremely higher user engagement, industry low levels of churn and a huge TAM. So, in the long run, this is still a very attractive stock.

In its latest reported quarter, Peloton said its revenue was up 6.0% year-over-year.

Sherman likes Peloton from the valuation point-of-view

According to Sherman, valuation on Peloton has come down so aggressively that the stock price can only go up from here. She noted:

What’s priced in is essentially minus 75% growth on hardware and 0% growth on subscriptions. So, the market is assuming Peloton wouldn’t gain a single new subscriber and hardware sales will drop by 75%. I think that’s too bearish.

Peloton also expressed plans of cutting 2,800 jobs in February in pursuit of $800 million in annual savings.

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