Peloton stock rises as Bank of America updates on new CEO, ‘big pay’

Peloton (PTON) stock rose nearly 10% Monday before earnings after an upgrade from Bank of America (BAC).

Bank of America analyst Curtis Nagle upgraded the stock to Buy and nearly tripled his price target from $3.75 to $9, citing the company’s recent earnings exercise, trust in its new CEO, and the possibility of “big pay”.

Shares were up 5.5% to $7.65 during the day.

Peloton’s jump on Monday extends a multi-week rally, and shares have soared 70% in the past month as investors expressed confidence in the fitness platform’s turnaround plan, which includes a target of marketing major.

Peloton’s first fiscal quarter earnings report last week for the period ended Sept. 30 beat Wall Street forecasts: Its adjusted earnings per share of $0 were better than the loss of $0.16 per share expected by analysts, and third-quarter revenue of $586 million it was in the front. of a forecast of $573 million, according to Bloomberg consensus estimates. Peloton also announced its new CEO, Apple ( AAPL ) Fitness + co-founder and Ford ( F ) CEO Peter Stern, after a months-long search. Stern will take the helm in January 2025.

After Peloton’s quarterly earnings report, many firms from JPMorgan (JPM) to Bernstein, BMO Capital, Macquarie, Truist, and now Bank of America raised their price targets on the stock. Analysts have cited the platform’s focus on driving profits and reducing capital costs. Bank of America’s Nagle said its new CEO “checks a lot of boxes.”

He also said Bank of America believes Peloton could exceed $300 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal year 2025, while the company itself is set a more modest guidance of between $240 million and $290 million.

Peloton’s shares have fallen from a high of $150 in 2021. The company’s rapid growth — fueled by the home fitness epidemic — has stalled for a long time. Customers turned their backs on the fitness platform, with enrollment dropping by nearly 400,000 between 2022 and 2024. And Peloton’s annual earnings in 2022 and 2023 fell short of Wall Street expectations.

Stern, who currently serves as president of Ford Integrated Services, “hopefully will provide the necessary guidance for the Company’s subscription growth,” said Bernstein analyst Aneesha Sherman, who maintained her Market-Perform rating. in stock.

On average, analysts tracked by Bloomberg expect shares to top $8 next year.

“Although Peloton remains at the forefront of the project to reduce infrastructure costs and improve hardware economics, growth remains difficult,” he wrote in a Nov. 1 letter.

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