Peloton Gets a “Buy” Rating from Analyst Despite A Lackluster IPO

According to a Baird analyst, private in-door cycling company Peloton is a buy, despite it potentially not being able to turn a profit for five years.

It was on Wednesday that Baird initiated coverage on the stock and gave it an “outperform” rating.

According to the firm, the digital fitness company has “created a better fitness model providing premium content via a vertically integrated digital platform.”

Analyst Jonathan Komp gave the stock a $28 price target, which is about 20% higher than where the shares are currently trading. “Key satisfaction/engagement measures are very positive and we see a sizable potential market. While achieving GAAP profitability may prove difficult over the next ~5 years due to investments, PTON possesses substantial long-term sales/profit upside,” said Komp.

Peloton was one of the most widely anticipated IPOs of the year. The company recently debuted on the market but has already lost about 20%.

“I feel like we’re six or seven different companies in one,” Peloton CEO John Foley told CNBC.
Komp acknowledges that the IPO was “disappointing,” but has a “positive outlook” for the company, especially if it delivers “strong early results.” Komp said it was a “broken IPO,” but “not a broken company.”

Disclaimer: We have no position in Peloton Interactive Inc. (NASDAQ: PTON) and have not been compensated for this article.