I previously believed this stock to be overbought. However, during "sell off", has now caught my attention coming up on their earnings call scheduled for Sept 10th. Peloton (PTON), exercise manufacturer of exercise treadmills, stationary bikes and interactive exercise software. Previously, it was common to see Peloton bikes in gyms, condominium complexes, and some residential. However, the residential segment has been struck with once in a lifetime demand, which will likely stick, as the pandemic will change consumer behavior. At this point in their product cycle, it is not a matter of if they will sell bicycles, it is a matter of how to manufacture enough.
Just to review financials from last quarter- PTON grew their revenue from 466M to 524M, a 66% increase. For Quarter 4 2020, consensus estimates have projected them to report ~570M in revenue. Most importantly, last quarter they raised their guidance to between 1.72B and 1.74B for fiscal year. PTON has over 1B in cash which will only grow in next 6-12 months, making it possible to invest in clothing, increase bike offerings and more exercise data for consumers. My projections is 570M in revenue in this quarter with strong guidance and customer engagement moving into 2021. PTON announced the release of a new bike and treadmill in near future.
My price target on this is $90.5 going into earnings and beating estimates, bringing it to $93.
I will be focused on the following on the conference call:
-Digital subscription numbers (+64% last quarter)
-Units sold (is the trend up still intact?)
-Aspirations in clothing manufacturing and will they add models to their bike offerings
-Revenue and Gross Profit
-Expenses (last quarter they had alarmingly high expenses, as they explained litigation expenses)