6 Peloton Analysts Break Down Q1 Earnings: ‘Not the Year We Envisioned’

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Peloton Interactive Inc. (PTON) shares dropped 35 percent Friday aft the institution reported a wider-than-expected nonaccomplishment and aggressively chopped its full-year guidance.

Peloton reported a fiscal first-quarter net per stock (EPS) nonaccomplishment of $1.25 connected gross of $805.2 million. Both numbers fell abbreviated of statement expert estimates of a $1.07 per-share nonaccomplishment and $810.7 million, respectively. Revenue was up 6 percent from a twelvemonth ago.

Connected fittingness merchandise sales, which made up 62 percent of Peloton’s full revenue, dropped 17 percent to $510 million. Subscription gross was up 94 percent to $304.1 million. Peloton reported 2.49 cardinal connected fittingness subscribers, up 87 percent year-over-year.

Looking ahead, Peloton guided for first-quarter gross of betwixt $1.1 cardinal and $1.2 billion, good abbreviated of expert estimates of $1.5 billion. Peloton besides chopped its afloat fiscal twelvemonth gross guidance from $5.4 cardinal to betwixt $4.4 cardinal and $5.4 billion.

New Normal?

MKM Partners expert Rohit Kulkarni said the pandemic poster kid is present transitioning to a caller normal.

“We were incorrect astir PTON’s quality to execute amidst reopening and competitory headwinds,” Kulkarni wrote.

Raymond James expert Aaron Kessler said Peloton’s risk-reward is balanced.

“We judge the banal is apt to stay range-bound until signs of expanding request return, which is apt to beryllium a mates quarters astatine least,” Kessler wrote.

Telsey Advisory Group expert Dana Telsey said she remains affirmative connected the semipermanent outlook for the connected fittingness business.

“However, near-term income visibility is clouded by slowing postulation online, a premix displacement to the little priced Bike, and slower adoption of Tread,” Telsey wrote.

Buying the Dip?

Bank of America expert Justin Post said the caller guidance is “not the twelvemonth we envisioned,” but the post-earning selloff seems overly bearish.

“While estimation cuts are a negative, we inactive expect 1.1mn sub adds successful FY22 (+47 percent y/y) contempt reopening impact, and determination is imaginable upside from caller products,” Post wrote.

KeyBanc expert Edward Yruma said Peloton has acceptable a debased barroom for fiscal 2022 up of imaginable caller instrumentality launches.

“It’s hard to lb the array astatine precisely this infinitesimal fixed the volatility, but LT maturation algo (low churn underpins beardown sub. NPV) and our enthusiasm stay intact,” Yruma wrote.

Needham expert Bernie McTernan said upside for Peloton volition hinge connected its maturation trajectory successful fiscal 2023 and beyond.

“Our forecast assumes a rebound successful FY’23 arsenic PTON is inactive successful the aboriginal portion of its adoption curve, we believe, and adding incremental lawsuit funnels, though fixed the existent outlook determination is simply a precocious grade of imaginable variability successful the outcome,” McTernan wrote.

Peloton Ratings, Price Targets

  • Bank of America has a Buy standing and lowered the terms nonsubjective from $138 to $112.
  • MKM Partners has a Neutral standing and slashed the terms people from $130 to $70.
  • Raymond James has a Market Perform rating.
  • KeyBanc has an Overweight standing and lowered the terms people from $155 to $110.
  • Needham has a Buy standing and chopped the terms people from $130 to $105.
  • Telsey Advisory Group has a Market Perform standing and chopped the terms people from $135 to $70.

By Wayne Duggan

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