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Peloton (NASDAQ:PTON) – the company that specializes in providing home fitness equipment as well as interactive online classes – has seen its share price soar recently amid expanding coronavirus-related lockdowns. Today, Wedbush Securities provided a further boost to Peloton’s share price as it added the company to its ‘Best Ideas’ list.
Wedbush Securities analyst James Hardiman wrote in an investment note:
"We are at the very early stages of the 'work-in' trend, a long-term shift toward at-home fitness products and services. Our rationale for this belief stems from a combination of worsening time poverty and evolving technology that allows fitness-seeking consumers to work out how they want, where they want, and when they want. Additionally, not only is PTON [Peloton] arguably the company in our coverage best insulated from the current coronavirus pandemic, but increasingly we see PTON as a potential beneficiary of widespread social distancing efforts, accelerating what we believe is already an inevitably shift."
In line with its bullish view, Wedbush assigned a 12-month price target of $35 to Peloton’s stock, representing an upside potential of around 57 percent relative to the current price level. Consequently, the company’s shares have rocketed higher by 9.93 percent in today’s pre-market session to $24.46. This follows yesterday’s resounding rally during which Peloton gained 12.83 percent to close at $22.25, marking it as one of the best-performing stocks amid a historic carnage in the broader market which saw the Dow Jones Industrial Average plunging by 2,999 points. Yesterday, was the worst day for stocks in the U.S. since the financial crash of 1987 as investor concerns regarding a global recession on the back of the coronavirus pandemic reached fever pitch.
Wedbush’s bullish view on Peloton forms a part of the growing chorus of endorsements by analysts in recent days. As an illustration, analysts at Needham published a list of stocks to buy in the case of an aggravation in the coronavirus pandemic. The list, published last week, included Peloton as well as Applied Materials – the company that supplies equipment, services and software for the manufacturing semiconductor chips.
Needham analyst Laura Martin wrote in the accompanying note that:
“Consumers perceive gym visits as increasingly risky over time, especially as they are fitness-focused. However, these consumers want to stay in shape. PTON [Peloton] bikes allow you to retain the social aspects of fitness by connecting to a community of fitness enthusiasts via live-streamed classes plus a deep library of past classes.”
Sensing a historic opportunity to capitalize on the growing coronavirus fears, Peloton is currently offering a 90-day trial of its subscription workout app. The trial allows prospective customers to try cycling, yoga, meditation, stretching, strength training, and a host of other online classes.
Bear in mind that, year to date, Peloton’s stock is down by 21.65 percent even though the company successfully navigated past the treacherous IPO lockup expiration – when restrictions on insider selling of shares ends – and reported modestly strong results for the fourth quarter of 2019. As a refresher, the company earned a revenue of $446.30 million in the applicable quarter, beating expectations by $42.56 million and marking an annual increase of 77.4 percent. It also raised its full-year guidance and now expects to add between 920,000 and 930,000 connected subscribers in the FY 2020. Peloton has also projected annual revenue of between $1.53 billion and $1.55 billion for the current year. All of these factors, according to Wedbush, render Peloton an attractive value play relative to its current stock price.