Peloton Announces Job Cuts. How to strategize with declining PTON shares?
Peloton (PTON) shares have experienced a downturn, with the stock currently trading more than 30% below its year-to-date high of $10.25 set in February. However, the outlook for the fitness equipment giant appears to be improving, according to analysts.
UBS analyst Arpine Kocharyan recently recommended owning Peloton shares for the longer term, upgrading the company's rating to "Buy" and raising the price target to $11. This suggests a potential upside of 55% from current levels. Kocharyan believes that Peloton's focus on cost discipline, operational restructuring, and subscription fee increases could unlock significant further upside in PTON stock in the second half of 2025.
The mean target for Peloton is about $10, indicating potential upside of more than 40% from current levels. Other forecasts suggest a close near $5.57 at the end of 2025, marking about a 53% increase from current prices around $3.65. The consensus among analysts places the stock's fair value target near $8.73 on average.
Peloton's operational restructuring, cost-cutting efforts, and attempts to revive profitability amid competitive pressures are influencing these predictions. The company announced plans to reduce its headcount by another 6%, which will reduce run-rate expenses by another $50 million in fiscal 2026. This move, along with the reduction of another $50 million of run-rate expenses from indirect costs in its current financial quarter, is expected to improve the company's financial health.
Peloton's initiatives will result in improved operating leverage, enhanced profitability, and greater investor confidence in the company's turnaround strategy. The company reported a surprise profit for Q4 2022 and reduced its net debt by 43% in its fiscal 2025.
Analyst sentiment is mixed but cautiously optimistic. Morgan Stanley set a target of $5.75, Goldman Sachs raised its price target to $11.50 and assigned a "buy" rating, and Deutsche Bank and Truist Financial also issued "buy" ratings with targets around $6.60 and $11.00 respectively. However, the consensus rating on Peloton Interactive currently sits at "Moderate Buy".
The 2025 Peloton share price is expected to moderately increase to roughly $4 to $6 by year-end, with some optimistic targets exceeding this range. Specifically, some forecasts estimate prices around:
- April 2025: Average price about $3.78 to $3.96
- May 2025: Around $4.00 to $4.01
- June 2025: Approximately $4.86
- October 2025: Around $5.00 to $5.04
- November 2025: Approximately $5.42 to $5.58
- December 2025: Estimates rise further but specific prices not detailed.
While the exact trajectory of Peloton's share price in the coming months remains uncertain, the general consensus among analysts suggests cautious, gradual growth rather than rapid surges.
[1] Source: Yahoo Finance [2] Source: MarketWatch [3] Source: Seeking Alpha [4] Source: Bloomberg
- Peloton's operational restructuring and cost-cutting measures are anticipated to positively influence its business, with analysts at UBS, Goldman Sachs, Deutsche Bank, and Truist Financial recommending buying Peloton shares, predicting a potential upside of $8.73 to $11.50 from the current prices.
- Despite a mixed sentiment among analysts, the general news regarding Peloton's finance indicates a projected moderately increasing share price, ranging from $4 to $6 by the end of 2025, as per various financial technology sources such as Yahoo Finance, MarketWatch, Seeking Alpha, and Bloomberg.
