On Friday, TD Cowen adjusted its outlook on Peloton Interactive (NASDAQ:PTON), reducing the company's price target to $3 from the previous $4 while keeping a Hold rating on the stock. Peloton's recent financial results revealed revenue figures for the third fiscal quarter of 2024 that slightly missed analyst and consensus estimates, attributed to weaker hardware sales. Despite these lower revenues, the company reported a better-than-expected EBITDA of $5.8 million, which was supported by more efficient marketing strategies.
Management at Peloton announced a revised revenue forecast for the fourth fiscal quarter, continuing the trend of softer hardware sales. However, they have also increased their EBITDA guidance. Additionally, a restructuring plan was unveiled alongside the appointment of new Co-CEOs. The company aims to achieve over $200 million in annual cost savings by the end of the fiscal year 2025, which is anticipated to lead to significantly positive free cash flow.
In response to these developments, TD Cowen has updated its estimates and discounted cash flow (DCF)-based price target to $3. The firm's decision to maintain a Hold rating reflects a cautious stance on Peloton's stock amid the company's ongoing adjustments and market challenges.
Peloton's management strategies, including the leadership change and cost-saving initiatives, are part of a broader effort to improve financial performance and shareholder value. The company's focus on achieving positive free cash flow by the end of fiscal year 2025 is a key element in its turnaround plan, as it navigates through a period of restructuring and recalibration of its business model.
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