Peloton Interactive (PTON) is expanding its manufacturing network with plans for a U.S. production plant, amid growing demand for its products. The company sells fitness equipment and offers an array of services that go with them.
Peloton plans to set up its first U.S. factory in Ohio’s Troy Township. The company will spend $400 million on the facility, which it will call Peloton Output Park. Construction will start this summer, with the goal of beginning production at the plant in 2023. The facility is expected to create more than 2,000 jobs in the Troy Township area across several categories.
The factory will produce Peloton’s bike and tread products. Even as it builds its own manufacturing plant in the U.S., Peloton plans to continue using its contract factories in Asia. (See Peloton stock analysis on TipRanks)
“The new Peloton Output Park gives us a massive strategic lever to make sure we have capacity, quality, and economies of scale in our bike and tread product lines, to support our continued growth for years,” said Peloton CEO John Foley.
UBS analyst Eric Sheridan reiterated a Sell rating with a price target of $74 on Peloton stock. The analyst’s price target implies 26.85% downside. Sheridan is bearish on the stock in part because of the declining Peloton app downloads at a time when rival apps are seeing rising downloads. Although its app downloads quadrupled over the year, Peloton’s share of app downloads in the industry has declined sequentially since January.
“Peloton views its digital app as a primary lead generation channel that has also been growing the fastest among other channels,” noted Sheridan.
Consensus among analysts on Wall Street is a Moderate Buy based on 18 Buy, 4 Hold, and 1 Sell ratings. The average analyst price target of $131.59 implies 30.08% upside potential to the current price.
PTON scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting the stock’s returns are likely to align with the market’s performance.
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