Shares in home-fitness cycling company Peloton Interactive (PTON) have surged 10% in trading on May 12, bringing the stock’s year-to-date gain to over 65%. That’s after the company informed investors that it surpassed 1 million aggregate Connected Fitness subscribers.
And now Andrew Left of Citron Research argues that enough is enough and investors should put Peloton into perspective: “This is retail mania – you can love the product, but stock has peddled its way to stupidity” tweeted the well-known activist short seller on May 12.
As Left points out Peloton’s market cap has surged $5B this year; and with 300K connected subscribers that translates to $17K per subscriber.
In contrast, the 2020 market cap for Teladoc (TDOC– the telemedicine and virtual healthcare company) is up $8B vs. paid members up 6.2 million or $1300 per subscribers, Left tweeted.
Nonetheless, five-star Stifel Nicolaus analyst Scott Devitt at Stifel Nicolaus has just raised his price target to $50 from $42, indicating 6% upside potential lies ahead. He also reiterated his Peloton buy rating.
“Elevated demand for the company’s products has continued thus far into F4Q, with demand outpacing supply in most geographies,” Devitt explained, describing Peloton as “an unstoppable juggernaut to be stopped only by way of self-inflicted wound from here”.
Indeed Wall Street analysts have an uniformly bullish outlook on Peloton stock. The Strong Buy consensus is due to 18 Buys ratings, vs just 1 Hold and 1 Sell.
However, due to the recent rally, the $46.65 average price target now indicates that shares could pull back 1% from current levels- suggesting that, in this case, Left could be right. (See Peloton stock analysis on TipRanks).
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