Bank of America (BofA) analysts believe that the fitness company Peloton is well-positioned to bounce back after years of challenges. They have placed a “Buy” rating on the company’s stock in Monday’s note sent to clients.
According to BofA analysts led by Curtis Nagle, Peloton’s recent earnings beat is a good indicator of its turnaround and predicts more success in the future. Peloton released its quarterly financial report last week and beat Wall Street estimates on adjusted earnings per share and revenue.
“For the first time in Peloton‘s history, the company is on a path of sustained Ebitda, following years of losses and cash burn,” Nagle wrote in the note.
Nagle believes Peloton should have $300 million in earnings before interest, tax, depreciation, and amortization (EBITDA) in fiscal 2025. The company, on the other hand, is predicting between $240 million and $290 million in EBITDA for next year.
Additionally, hiring Ford executive Peter Stern as the new CEO is predicted to have positive effects on the company’s business. Stern, who will take over in January 2025, is expected to result in the growth of the subscriber base and reduced expenses.
Nagle has boosted Peloton’s price target from $3.75 to $9 per share. The stock rose by 3.40% on Monday to close at $7.50 per share and is currently 28.81% up year-to-date.