JMP Securities analyst Andrew Boone has maintained their neutral stance on PTON stock, giving a Hold rating yesterday.
Geoff Meacham has given his Hold rating due to a combination of factors concerning Peloton Interactive’s recent strategic initiatives and their implications on the company’s financial outlook. The collaboration between Peloton and TikTok, though potentially broadening Peloton’s reach within the digital fitness space, primarily indicates a more aggressive marketing strategy on the social platform rather than a direct increase in organic user traffic. Meacham acknowledges the potential for Peloton’s digital app to capture more market share among fitness applications, but he remains cautious about the direct impact this partnership will have on the company’s growth trajectory.
Furthermore, the analyst interprets the partnership as a sign that Peloton may escalate its advertising expenditures on TikTok, especially considering the presence of sponsored ads when searching for Peloton-related terms on the platform. While the previous quarter’s financials hinted at an uptick in sales and marketing investments for the fiscal year 2024, the specifics of the increased spending remain unclear, particularly in relation to generating organic traffic. This strategic ambiguity, coupled with the absence of a clear path to free cash flow improvement as inferred from the report’s mention of a negative free cash flow yield, supports Meacham’s decision to maintain a Hold rating on Peloton Interactive’s stock.
In another report released yesterday, Bernstein also maintained a Hold rating on the stock with a $10.00 price target.
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Peloton Interactive (PTON) Company Description:
Founded in 2012, Peloton Interactive Inc. is a New York-based exercise equipment and media company, which provides interactive fitness products such as the Peloton Bike and the Peloton Tread, for live and on-demand classes.
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