shares bounced back Friday, following a notable slump, and an upgrade from Stifel to Buy. The analyst likes preliminary second-quarter result the maker of exercise equipment disclosed late Thursday.
The stock is up 6% to $25.67 in premarket trading, after falling 24% Thursday in response to a report by CNBC saying the company is temporarily stopping production of connected fitness products. After the close of trading, CEO John Foley denied that production is halting, but did acknowledge that the company is adjusting its output and reviewing its cost structure.
Tne company also pre-released its results for the second quarter of its fiscal year.
Peloton Interactive (ticker: PTON) anticipates revenue of $1.14 billion, matching Stifel’s estimate of $1.138 billion and above Wall Street’s projection of $1.1 billion to $1.2 billion. It predicted a loss in terms of adjusted Ebitda—earnings before interest, taxes, depreciation, and amortization—in the range of $270 million to $260 million, while Stifel had expected a loss of $330 million.
Stifel analyst Scott Devitt upgraded the stock from Hold on Friday.
“We believe the stock has over-corrected relative to underlying business conditions,” Devitt said, noting that Thursday’s closing price was below pre-pandemic levels even though the company has a significantly larger subscriber base and more customers signing up.
Peloton reported connected fitness subscriptions of 2.77 million as of the end of the quarter in its preliminary results. This was just slightly below Stifel’s estimate of 2.8 million and guidance from management of 2.8 million to 2.85 million. It is 289% higher than numbers reported in the same period last year.
That said, Devitt said he is “taking a conservative approach to the remainder of the year” and lowering his target for the stock price target to $40 from $56, while also reducing his financial forecasts for the fiscal third and fourth quarters until further evidence of stabilization in the business emerges.
For the third quarter, Stifel expects $1.17 billion in revenue vs. a prior estimate of $1.44 billion. It expects the firm to generate $1.01 billion in revenue for the fourth quarter, compared with a previous call of $1.07 billion.
Write to Karishma Vanjani at [email protected]