Buy Coronavirus Standout Peloton (PTON) Stock Ahead of Earnings?
Zacks Investment Research | May 04, 2020 09:09PM ET
Peloton PTON shares have soared 55% since March 23 to crush the S&P (NYSE:SPY) 500’s 25% comeback. In fact, the high-tech stationary bike firm has seen its stock price climb 20% in 2020, which is no easy task considering the coronavirus market selloff.
Now the question is should investors think about buying surging Peloton stock before it reports its Q3 fiscal 2020 financial results after the market closes on Wednesday, May 6?
Peloton Riding the Stay-at-Home Wave?
Peloton was founded in 2012 and its high-tech stationary bikes have taken off in popularity since then. PTON offers users the ability to follow along with classes on their connected TV monitors, and are part of a growing movement of higher-end workouts.
Peloton’s connected bikes start at $2,245, while its newer treadmills begin at $4,295. On top of that, the company makes money from its $39 per month “All-Access Memberships.” Meanwhile, people who don’t own Peloton equipment can pay $12.99/mo for a digital membership. The New York-based firm said that last quarter its total members grew to over 2 million, while its Connected Fitness Subscribers soared 96% to 712,005.
More recently, analysts have projected that PTON has benefitted from the stay-at-home world as people sign up for the app or buy its equipment, with gyms closed around the country. Peloton stock has benefited as part of a group of stocks viewed as immune to the coronavirus, alongside the likes of Amazon ZM , and others.
Outlook
The nearby chart also shows that Peloton stock has easily crushed fellow 2019 IPO standouts Uber BYND since it went public in late September. Peloton shares are up over 40% overall and also popped 5.8% during regular trading Monday to $33.90. This comes in below its April 16 highs of nearly $38 a share and could give the stock more room to run if it’s able to impress Wall Street with strong Q3 results and guidance.
Moving on, our current Zacks estimates call for Peloton’s third quarter fiscal 2020 revenue to come in at $487.53 million—we don’t have a comparable figure from the year-ago period before it was public. That said, PTON’s revenue jumped 77% last quarter to $466.3 million.
Peloton’s full-year fiscal 2020 revenue is projected to climb 70.5% to reach $1.56 billion. This would come on top of 2019’s 110% expansion to $915.0 million. Peeking further ahead, PTON’s fiscal 2021 sales are expected to jump another 48% to $2.30 billion.
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On the bottom line, Peloton is expected to report an adjusted Q1 loss of $0.17 a share, with its full-year loss expected to come in at -$0.95 a share. The firm’s fiscal 2021 loss is only expected to shrink slightly to -$0.91 per share.
Bottom Line
Peloton is currently a Zacks Rank #3 (Hold) that has seen its earnings revisions trend upward. The high-end indoor fitness company does seem immune to the current conditions, and it’s not hard to imagine it actually seeing increased demand with everyone stuck at home.
PTON stock is up so big recently that it could see a near-term selloff even if it posts strong results. However, longer-term investors looking for solid growth potential might want to consider taking a look at Peloton.
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