- Today, an analyst lowered her prediction for the price of Peloton shares for the fourth time in the previous year.
- The business is attempting to restore positive cash flow by reducing expenses.
Peloton Interactive (NASDAQ:PTON)
After an analyst drastically lowered their price objective for shares of exercise equipment maker Peloton Interactive (NASDAQ:PTON) on Friday, the stock took another hit even though the market averages were up substantially as of 11:50 a.m. ET today, Peloton stock was down 6%.
What’s the Reason
UBS analyst Arpine Kocharyan recommended selling shares of Peloton Interactive (NASDAQ:PTON). The Fly reports that today she drastically reduced her price goal, from $13 per share to $8. She deserves credit for maintaining a sell rating on Peloton Interactive (NASDAQ:PTON) stock throughout its decline and reducing her price target accordingly. What Kocharyan is doing now is consistent with her earlier stance.
Kocharyan expresses skepticism that Peloton Interactive (NASDAQ:PTON) will once again experience a sales increase. She also doubts that the corporation can increase its earnings by implementing its plans to minimize costs. Peloton Interactive (NASDAQ:PTON) has a lot of unanswered questions, so it’s not surprising that the market would react unfavorably to the stock after Kocharyan’s comments.
In response to Kocharyan’s remark, Peloton Interactive (NASDAQ:PTON) did indeed unveil in February an $800 million annual savings plan. According to management, the plan was to cut operating costs by $500 million. The company’s most recent quarterly report shows that these operating costs are being covered faster than expected.
So far, so good. However, operating costs still exceeded $1 billion in the most recent quarter, doubling yearly.
There has been an uptick in operating costs, although many of these expenditures were one-time events, and management is making headway on other operational costs, such as marketing and advertising. Conclusion: Kocharyan’s concerns are warranted, and while Peloton has made some headway in its recovery, the company still has a ways to go.
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