Peloton's stock enters record-low territory after UBS cuts price target in half

By Tomi Kilgore

UBS's Arpiné Kocharyan is now Wall Street's top bear on the at-home fitness company, as website visits have fallen

Investors rode shares of Peloton Interactive Inc. into fresh record-low territory Monday, after UBS slashed its price target in half because of increased concerns over the subscriptions outlook for the at-home fitness company.

Analyst Arpiné Kocharyan had previously noted a "positive trend" in May and June in total interactive visits to Peloton's website, which is defined as total visits minus those in which visitors leave the site without taking any action.

"Our dataset shows that trend turned negative in July," Kocharyan wrote in a note to clients. "Most recent data for August shows further weakness."

Kocharyan slashed her price target on the stock to $4 from $8, while keeping her rating at sell. She now has the most bearish view and the lowest price target of the 27 analysts surveyed by FactSet who cover the company.

The stock (PTON) had bounced as much as 2.9% earlier Monday, before cycling lower to be down 1.8% toward a fresh record-low closing in afternoon trading.

Investors have endured a pretty rough road in past few weeks, with the stock losing ground in 12 of the past 14 sessions and plunging 34% during that stretch.

That follows a 34.3% plummet in August, which was the stock's worst month since it fell 51.9% in November 2021, and its second-worst month since going public in September 2019.

Read: Peloton's stock tanks 24% as revenue outlook falls short, bike-recall costs pile up

Regarding the uptick in website visits in May and June, Kocharyan said she's aware that "significant promotional activity" during the slower months and a coming new app launch could have temporarily boosted visits.

But even though visits were up, time spent on the site was down.

"While Peloton has successfully attracted more unique visitors to the website, our dataset also shows that time spent per interactive visit is still down [year over year] -- down 10% in July, after June was down 8% and May down 11%. August was down 11% [year over year]," Kocharyan wrote.

With this data in mind, Kocharyan doesn't see evidence of Peloton meeting bullish Wall Street growth expectations for connected-fitness subscriptions.

She now expects connected-fitness subscriber growth of 4% in fiscal 2024 and growth of 7% in fiscal 2025, down from a previous projection of 11% growth for both years.

Peloton's stock has tumbled 44.8% year to date, while shares of fitness-products maker Nautilus Inc. (NLS) have sunk 53% and shares of fitness-center operator Planet Fitness Inc. (PLNT) have dropped 42.4%. Meanwhile, the S&P 500 SPX has gained 12.8% this year.

-Tomi Kilgore

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09-25-23 1341ET

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