Macquarie downgrades Peloton with volatility ‘now the norm’

Macquarie downgraded Peloton Interactive to Neutral from Outperform with a price target of $7, down from $10. The company’s fiscal Q4 results included seat post recall-related costs and elevated subscriber pausing and churn, and as a result, more free cash flow weakness is expected in the first half of fiscal 2024, the analyst tells investors in a research note. The firm says that while hardware sales may have shown positive signs in recent weeks, “volatility is now the norm.” While a turnaround at Peloton “could still happen, the continued volatility has made it too difficult to project,” contends Macquarie. The firm believes the company’s relationship with consumers, retailers, and investors “is further in view with disruptions, which could affect take-out likelihood.”