Until today, most of Wall Street had checked out of Peloton (NASDAQ:PTON). The at-home fitness stock made a name for itself as a winner of the early pandemic era. It shot to the top of Wall Street’s radar alongside Zoom (NYSE:ZM) and Teladoc Health (NYSE:TDOC) as the U.S. stayed inside. But when it failed to adapt to a post-pandemic market, PTON stock fell hard and fast. Most experts weren’t optimistic, but Oppenheimer has issued a bullish price target and an “outperform” rating.
What’s Happening With PTON Stock
At first glance, it’s hard to be excited by this news. PTON stock hasn’t rallied today, even in the face of such a positive endorsement. Before disregarding the news as insignificant, though, investors should consider the bigger picture. Today has been a difficult day for most stocks. One notable exception is Tesla (NASDAQ:TSLA), which is still riding high from its better-than-expected Q2 earnings report. But as InvestorPlace contributor Chris MacDonald reports, “all major indices are in the red this afternoon with losses accelerating. Whether we’re talking about the Dow, S&P 500 or the Nasdaq, which is leading today in terms of losses, it’s ugly out there.”
That said, let’s take a look Peloton and it’s recent upgrade. Oppenheimer analyst Brian Nagel has issued a 12-month to 18-month price target for PTON stock of $20. That’s more than double the current per-share price of $9.84 at the time of writing. Seeking Alpha reports that “key points include potential upside with PTON’s new senior leadership in place and strategic pricing shifts that could drive consumer adoption over time.” Nagel adds, though, that the bullish call is both long-term and speculative, despite the positive growth catalysts he projects for PTON stock.
Though he acknowledges that Peloton has faced significant challenges on its journey “from promising tech unicorn to COVID-19 winner, to post-pandemic victim,” Nagel is optimistic about the company. “We believe that within the dynamic and fragmented health and wellness segment, there exists opportunity for a better managed and more-disciplined PTON,” he states.
What It Means
This bullish call comes at a good time for Peloton. The company has shed more than 70% year-to-date. It hasn’t seen any substantial growth since early July when news of manufacturing outsourcing pushed PTON stock into the green. But through it all, shares are still down more than 5% for the month, displaying clear volatility. The unveiling of new equipment wasn’t enough to help it gain real momentum as investor concerns regarding consumer spending habits took over.
Through what he describes as an “exhaustive study,” Nagel has outlined what his team sees as a growth opportunity for Peloton. Investors should watch carefully to see if other Wall Street firms change their bearish stances on PTON stock. The company has a long way to go before nearing Nagel’s ambitious price target, but it is certainly possible. Much of its potential success will depend on consumer habits shifting as inflation cools.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
