BofA Securities analysts revised their rating on Peloton Interactive (NASDAQ:PTON) from Buy to Neutral and set a new price target of $6.50, down from the previous target of $13.00. This was followed by the company’s reported Q4 EPS miss and weaker-than-expected guidance.
The analysts explain the downgrade by pointing out the limited visibility on growth initiatives. Despite recognizing the value in the company’s subscriber base, with a potential gross profit per subscriber of $1,350 and an overall value of around $4 billion, there are concerns about the certainty of future subscriber growth drivers. The analysts anticipate that elements such as app users, Fitness-as-a-Service (FaaS) expansion, partnerships, and international marketing could contribute to gross additions, but a rise in churn rates might hinder net subscriber growth.