Peloton (PTON) snuck out its FQ2 earnings before the market opened on Tuesday and once again slashed its outlook for the fiscal year.
While the prior forecast had revenue coming in between $4.4 billion to $4.8 billion, the company now expects revenue in the $3.7 billion to $3.8 billion range. The consensus estimate stood at $4.1 billion.
Whereas the Street was projecting an adjusted EBITDA loss of $463 million, Peloton anticipates a wider loss of $625 million to $675 million, compared to a loss of $425-475 million beforehand.
As for FQ2’s display, revenue increased from $1.06 billion to $1.13 billion, a year-over-year uptick of 6.6% and roughly in-line with the Street’s call of $1.14 billion. On the bottom-line, the company posted a loss of $1.39 a share, worse off than Wall Street’s $1.20 loss per share forecast.
Beyond the headline numbers, the troubled home exercise specialist also dropped some big news.
To deal with the growing losses and lackluster demand, the company said it will reduce around 20% of the workforce, amounting to 2,800 jobs. Peloton sees its cost-cutting plan resulting in annual savings of at least $800 million.
Additionally, it announced some big changes in the C-Suite, including the transition of Co-founder and CEO John Foley to Executive Chair. Barry McCarthy, a former Netflix and Spotify CFO, will take his position.
All Peloton conversations recently have revolved around the prospect of a takeover, but Baird analyst Jonathan Komp thinks this latest action could meaningfully improve the company’s standing.
“While today’s announcement in our view lowers the probability of a strategic takeover (we had assumed <25% probability), we initially view today’s announced organizational changes as the right moves for the long-term health of the organization as a stand-alone company,” the 5-star analyst said. “We are impressed and encouraged to see John Foley and the board add a highly experienced technology/media operator/investor in new CEO Barry McCarthy, and to commit to a sizable restructuring that we believe is needed.”
Accordingly, Komp rates PTON shares an Outperform (i.e. Buy) along with a $40 price target. (To watch Komp’s track record, click here)
The Street’s average target is just a touch above Komp’s objective; at $42.17, the figure suggests the stock will appreciate ~11% over the coming months. Overall, based on 10 Buys, 8 Holds and 1 Sell, the stock boasts a Moderate Buy consensus rating. (See PTON stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
