Peloton Shares Increase on 1 Million Fitness Subscriber Milestone

Shares of Peloton Interactive (PTON) rose over 2% after the home-fitness cycling company informed investors that it surpassed 1 million aggregate Connected Fitness subscribers.

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The company, which sells exercise bicycles and is known for its streaming workout videos, advanced 2.2% to $43.75 in U.S. pre-market trading.

Stay-at-home orders, which have left gyms and fitness clubs shut down, have increased demand for Peloton’s exercise bikes and have led to a surge in digital fitness subscriptions.

Peloton said last week that sales of its electric bikes and other fitness equipment leaped 61% to $420.2 million in its fiscal third quarter ended March 31. Its subscriber numbers almost doubled to over 886,100.

Following the strong results, the exercise company raised its forecast for Connected Fitness subscribers, or paid subscribers, for the year to 1.04 million to 1.05 million, from its previous estimate of 920,000 to 930,000. In addition, it also lifted its full-year revenue guidance be in the range of $1.72 billion to $1.74 billion, compared with an earlier forecast of $1.53 billion to $1.55 billion.

Five-star analyst Scott Devitt at Stifel Nicolaus raised the stock’s price target to $50 from $42, while reiterating a Buy rating.

“Elevated demand for the company’s products has continued thus far into F4Q, with demand outpacing supply in most geographies,” Devitt wrote in a note to investors. “Peloton is working with its manufacturing partners to increase capacity and is incurring higher costs to expedite shipments in the hopes of reducing extended customer delivery windows which are a result of the surge in demand.”

Devitt described Peloton as “an unstoppable juggernaut to be stopped only by way of self-inflicted wound from here”.

Overall, Wall Street analysts have a bullish outlook on Peloton stock. The Strong Buy consensus rating is based on 18 Buys, 1 Hold and 1 Sell. The $46.65 average price target indicates 9% upside potential in the shares in the coming 12 months. (Peloton stock analysis on TipRanks).