By Christiana Sciaudone
Investing.com -- Peloton (NASDAQ:PTON) jumped almost 15% to yet another record after announcing a deal to buy equipment maker Precor for $420 million.
Shares of the bike maker subsequently received price target increases from Wedbush and Stilfel. Peloton has been a major beneficiary of the coronavirus pandemic, which as gyms around the world shuttered, forcing those of us interested to build our own home fitness centers. Peloton has been struggling with an excess of demand and an inability to fulfill the deep, desperate need people suddenly have found for at-home bicycles with classes attached. This may help to speed things up. Customers have been told they'd have to wait at least 10 weeks in some cases for equipment to be delivered.
Nonetheless, the stock has rallied about 480% in 2020, alongside other winners like Zoom Video Communications Inc (NASDAQ:ZM), up 500% this year.
Precor is a commercial fitness equipment provider with a U.S. manufacturing presence, which will help establish Peloton's domestic manufacturing capacity and accelerate its reach into the commercial market. By making fitness equipment closer to U.S. consumers, Peloton will be able to deliver connected fitness products to members sooner, the company said in a statement. Peloton plans to produce connected fitness products in the U.S. before the end of 2021.
Precor's U.S. facilities will join Peloton's existing manufacturing network with its third party manufacturers and the Tonic facilities based in Taiwan.
Precor is a division of Finnish sporting goods company Amer Sports, among whose owners is China's Tencent (HK:0700) Holdings (OTC:TCEHY) Limited. The transaction is expected to close early next year.