Shares of fitness equipment and services company, Peloton Interactive (PTON), witnessed a significant rise on Friday following an upgrade by UBS, which also uplifted its price target. The investment bank shifted its rating from "sell" to "neutral" and raised the price target to $10.00 from a previous $2.50.
Analysts noted that Peloton's efforts in reducing operational costs, particularly operating expenses, could likely yield earnings before interest, taxes, depreciation, and amortization (EBITDA) that may surpass the company's estimation of $200 million.
UBS also underscored the appointment of former Ford executive, Peter Stern, as Peloton's new CEO, expected to assume his role from January. Analysts see Stern's takeover as an opportunity to recalibrate against more realistic expectations from the buyside. They further highlighted the potential early successes Stern could register through growth strategies like improving subscription pricing. Stern's compensation, linked to revenue, operating income, EBITDA, and free cash flow performance, was also highlighted as a positive move.
Peloton Interactive's shares surged by 8%, reaching $10.39, marking their highest level since April 2023.