By Investors are cheering Peloton Interactive Inc (NASDAQ: PTON) this morning after the connected fitness company came in well above Street estimates for revenue in its fiscal second quarter.
Peloton stock is being rewarded because the management raised its outlook for full-year profit as well on Thursday.
The exercise equipment maker generated $674 million in revenue – handily above $654 million that analysts had forecast. On a year-over-year basis, however, the metric was down some 9.0%.
Peloton shares are still down about 5.0% versus their year-to-date high.
Peloton stock soars on encouraging guidance
Peloton attributed its better-than-expected quarterly revenue partly to a deal it signed with Costco in late 2024. Cutting marketing, administrative, and R&D costs, it added, helped on the EBITDA front as well.
On the downside, the at-home fitness company guided for up to $625 million in sales for the current quarter. Analysts, in comparison, were at $652 million instead.
But Peloton stock is rallying, nonetheless, since investors are focusing more on its profit outlook.
The management expects adjusted EBITDA to fall between $70 million and $85 million in Q1 – well above experts’ forecast of $50.4 million only.
Additionally, PTON said its revenue will likely pick up in the back half of 2025.
Peloton’s new CEO is committed to a turnaround
Peloton Interactive investors seem to be ignoring the wider-than-expected loss in the recently concluded quarter as well.
The Nasdaq listed firm lost 24 cents a share, much more than 18 cents per share consensus, as it continued to struggle with making its hardware business more profitable.
Under the leadership of its new chief executive Peter Stern, PTON is fully committed to a recovery in it high-margin, recurring revenue from subscriptions.
That part of the business made up well over 50% of the company’s overall revenue in Q2.
Note that Peloton stock does not currently pay a dividend and, therefore, remains unattractive for income investors in 2025.
Does Peloton stock have any further upside?
Despite today’s rally, Peloton stock may not be out of room to run just yet, as per UBS analyst Arpine Kocharyan.
Kocharyan sees upside in Peloton stock to $10 that indicates potential for another 20% gain from current levels.
She’s convinced the company’s share price could benefit as the management continues to cut costs.
Additionally, markets no longer expect much from PTON for the next 2 to 3 years, which creates room for positive surprises, as per the investment firm.
Most importantly, UBS has confidence in the ability of subscription industry veteran, Peter Stern, to orchestrate a turnaround at Peloton Interactive Inc.
Note that Stern was the driving force behind Apple Fitness+ and has served at other renowned companies like Ford as well.
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