Peloton Stock Surges as Cost-Cutting Moves Lead To UBS Upgrade
Key Takeaways
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.
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