Breaking News
Investing Pro 0

Analysts Positive on Peloton's Ongoing Restructuring, Risk/Reward 'Increasingly Attractive'

Stock Markets Aug 15, 2022 12:54
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters
 
PTON
-14.44%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Senad Karaahmetovic

It was reported on Friday afternoon that Peloton (NASDAQ:PTON) told employees it will slash 780 jobs, close some stores and increase prices on some equipment.

Moreover, the company said it is exiting last-mile logistics and closing its remaining warehouses as it shifts to third-party vendors.

Peloton said an “aggressive” reduction in the number of stores will begin in 2023, although it is yet unclear how many stores out of a total of 86 will be closed.

“The shift of our final mile delivery to 3PLs will reduce our per-product delivery costs by up to 50% and will enable us to meet our delivery commitments in the most cost-efficient way possible,” McCarthy wrote in a memo to employees seen by CNBC.

“These expanded partnerships mean we can ensure we have the ability to scale up and down as volume fluctuates.”

Peloton investors weighed in positively on the news with shares closing over 13% higher on Friday.

Here’s what Peloton analysts have to say about the developments on Friday:

Piper Sandler: “Risk/reward prospects are looking increasingly attractive. PTON has accomplished many of the restructuring activities necessary to stabilize the business. We think existing user engagement remains strong and PTON may be able to consolidate its position within connected fitness given the difficulty of raising capital for private companies. At this point, we think the big question centers around when will demand stabilize, and we still struggle with long-term TAM – hence we reiterate our Neutral rating.”

JPMorgan analyst: “We remain positive on PTON shares as the company continues to shift its cost structure from fixed to variable with an eye toward turning FCF positive in the back half of FY23… All of these strategic changes effectively dismantle PTON’s vertical integration—a key part of the bull thesis a few years ago— but they are necessary given recent growth rates, still-challenged cash flow, seasonality in the business, & macro uncertainty.”

Telsey Advisory Group analyst: “We continue to believe it is early days in the formation of Peloton's new strategic direction, and it will take 12-24 months to have the pieces in place… Given the lack of visibility into demand levels, profitability, and cash flow, we maintain our Market Perform rating.”

 

Analysts Positive on Peloton's Ongoing Restructuring, Risk/Reward 'Increasingly Attractive'
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email