By Dhirendra Tripathi
Investing.com – Peloton (NASDAQ:PTON) rose more than 3% Monday after Loop Capital rated it a buy with a price target of $140, which is 32% higher than its current level of $106.
The brokerage said the negative effect of the company’s treadmill recall has been more than accounted for.
The shares are off 40% of their January highs, a situation accelerated by the company’s April recall of its Tread+. Peloton had first ignored a regulator’s directive to recall the equipment after a child died.
The company relented as public outcry grew over rising incidents of injuries to children while the machine was in operation.
"Although we fully expect some impact from the recalls, we believe the impact will be short-lived and that management's guidance likely bakes in an excessive amount of conservatism," the Loop note said.
Peloton has plans to start manufacturing products at a new U.S. plant in 2023. Its launch in Australia is slated for the second half of 2021.
The home exercise disruptor has developed a first-of-its-kind subscription platform that combines equipment, proprietary networked software, and streaming digital fitness and wellness content.
The company has been able to develop a robust user base of more than 5.4 million across the U.S., Canada, the U.K. and Germany.