Source: JHVEPhoto / Shutterstock.com
To date, most of Wall Street has been checked out peloton (NASDAQ:PTON). The at-home fitness stock has made its mark as a winner of the early pandemic era. It shot to the top of Wall Street’s radar next to it zoom (NYSE:ZM) and Teladoc health (NYSE:TDOC) since the US stayed inside. But failing to adjust to a post-pandemic market, PTON stock fell hard and fast. Most pundits weren’t optimistic, but Oppenheimer has issued a bullish target price and an outperform rating.
What happens to PTON Stock
At first glance, it’s hard to be excited about this news. PTON stock has not recovered today, even in the face of such positive confirmation. However, before the news is dismissed as insignificant, investors should consider the bigger picture. Today was a tough day for most stocks. A notable exception is Tesla (NASDAQ:TSLA), which is still going strong after its better-than-expected Q2 earnings report. But InvestorPlace contributor Chris MacDonald reports: “All the major indices are down this afternoon and losses are mounting. Do we talk about them? dow, S&P500 or the Nasdaqwhich is the leader in losses today, it’s ugly out there.”
Let’s take a look at Peloton and its recent upgrade. Oppenheimer analyst Brian Nagel has a 12- to 18-month price target on PTON stock at $20. That’s more than double the current price per share of $9.84 at the time of writing. Seeking Alpha reports that “key issues include potential benefits with PTON’s new leadership and strategic pricing changes that could drive consumer adoption over time.” However, Nagel adds that despite the positive growth catalysts he predicts for PTON stock, the bullish call is both long-term and speculative.
While acknowledging that Peloton has faced significant challenges in its journey “from promising tech unicorn to COVID-19 winner to post-pandemic victim,” Nagel is bullish on the company. “We believe there is opportunity for a more managed and disciplined PTON within the dynamic and fragmented health and wellness segment,” he says.
What it means
This bullish call comes at a good time for Peloton. The company is down more than 70% year-to-date. There hasn’t been any significant growth since early July, when news of manufacturing outsourcing sent PTON stock soaring. But despite it all, shares are still down more than 5% this month, showing clear volatility. The unveiling of new devices wasn’t enough to help it really gain momentum as investor concerns about spending habits prevailed.
Through what he calls an “exhaustive study,” Nagel has outlined what his team sees as a growth opportunity for Peloton. Investors should watch closely for other Wall Street firms changing their bearish stance on PTON stock. The company still has a long way to go in approaching Nagel’s ambitious price target, but it’s certainly possible. Much of its potential success will depend on changing consumer habits as inflation cools.
At the time of publication, Samuel O’Brient held no position (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines.