Key Takeaways
- UBS upgraded Peloton Interactive stock to “neutral” from “sell” on optimism about the fitness and equipment firm’s moves to reduce expenses.
- The analysts also raised the price target to $10.00 from $2.50.
- Along with the cost-cutting, UBS said the company has a chance for a reset under new CEO Peter Stern, who will be taking over next month.
Shares of Peloton Interactive (PTON) jumped Friday when UBS upgraded the stock and raised the price target, pointing to the fitness equipment and services company’s cost-cutting moves.
The bank lifted its rating to “neutral” from “sell,” and boosted the price target to $10.00 from $2.50.
The analysts wrote in a note to clients that because of the reduced costs, especially operating expenses, they see earnings before interest, taxes, depreciation, and amortization (EBITDA) beyond the $200 million Peloton has estimated.
They also pointed to the selection of former Ford (F) executive Peter Stern as the new CEO, who is taking over in January. UBS said the change offered a chance “to further reset the bar against buyside expectations that are more reasonable now.” The analysts added that Stern has a clearer setup “to register early success with low hanging fruit growth initiatives such as subscription pricing increase.” They also explained that they like how his compensation is “tied to revenue/operating income and EBITDA/free cash flow performance.”
Peloton Interactive shares recently were up 8% to $10.39, their highest level since April 2023.
TradingView
:max_bytes(150000):strip_icc()/GettyImages-2167023445-52244ae5ffba4a6ea75a60cc7387f373.jpg?w=1200&resize=1200,0&ssl=1&description=Peloton+Stock+Surges+as+Cost-Cutting+Moves+Lead+To+UBS+Upgrade){kind=link}