Peloton (PTON) Stock Forecast & Price Target

Peloton Interactive Inc. has demonstrated a robust financial performance with a gross margin of 47.2%, reflecting a 690 basis points year-over-year increase, which surpasses both the company's guidance and analyst expectations. The projected revenue for fiscal year 2026 indicates a modest growth of 0.9% to $2.50 billion, driven by an anticipated increase in the percentage of gross profit derived from subscriptions, expected to rise from approximately 35% to 60% over time. Additionally, the company has reported significant improvements in profitability metrics, with a substantial increase in adjusted EBITDA and free cash flow guidance for fiscal year 2025, supporting a positive long-term outlook for the business.

Peloton Interactive's financial performance reveals significant challenges, particularly in its Connected Fitness Products segment, which experienced a 21% year-over-year decline in sales, amounting to $253 million. While subscription churn improved slightly to 1.4%, overall subscription revenues were still down 1% year-over-year, totaling $421 million, and are projected to further decline by 7% in FY'25, with no expected return to growth until FY'29. Additionally, total sales are forecasted to drop by 8.2% to $2.49 billion, fueled by a decrease in connected fitness subscribers and a shift in market dynamics towards higher-churn secondary markets, raising concerns about the company's long-term growth prospects.