What to Expect When Peloton Reports After the Close

Peloton Interactive Inc. (NASDAQ: PTON) is scheduled to release its fourth-quarter financial results after the markets close on Wednesday. The consensus forecast is a net loss of $0.36 per share and $422.93 million in revenue.

Wedbush’s James Hardiman sees Pelton benefiting from the fitness industry’s strong secular tailwinds, even though he also points out that there is an extremely fickle customer base. The other risk, probably without needing to be said, is a steady stream of fad exercise and health equipment, followed by gym concepts and a more recent trend in endless health and fitness apps. Hardiman has surveyed Peloton users and prospective customers and counted “our own experience with the product” to suggest that Peloton likely will not prove to be a fad. He sees the company as one of a small number of fitness companies that are likely to “be an enduring force going forward.”

Peloton had about 1.4 million customers when it came public, defined as individual users with a Peloton account. The company is deemed to have a first-mover advantage, as a compelling subset of the fitness market that offers consumers what they want and where and when they want it. Despite a considerable amount of work ahead of it, Hardiman sees Peloton as having the best shot of becoming synonymous with at-home fitness. Some recent problems pointed out were a tone-deaf holiday commercial and competitive interactive fitness products announced at the recent Consumer Electronics Show.

For specific subscriber numbers ahead, Hardiman sees it reaching as much as 4 million. Some 3 million would be from the United States. While this may seem a difficult task, it is pointed out as just 2% of U.S. households and about 6% to 7% of the company’s total U.S. addressable market, or 20% to 25% of its U.S. serviceable addressable market. Hardiman also says that Peloton is only just beginning to scratch the surface of international markets that can significantly expand its total addressable markets.

Excluding Wednesday’s move, Peloton stock had outperformed the broad markets with a gain of about 18% year to date. Over the past quarter, the stock was up 34%.

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Here’s what analysts had to say ahead of the report:

• Robert Baird has a Buy rating with a $35 price target.
• BMO Capital Markets rates it at Market Perform with a $27 price target.
• JPMorgan’s Outperform rating comes with a $38 target price.
• Raymond James has an Outperform rating and a $36 price target.
• Stifel has a Buy rating with a $37 target price.
• Merrill Lynch has a Buy rating and a $35 price target.

Shares of Peloton traded down about 4% to $32.28 on Wednesday, in a post-IPO range of $20.46 to $37.02. The consensus price target is $35.84.

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