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Analysts Just Made A Massive Upgrade To Their Peloton Interactive, Inc. (NASDAQ:PTON) Forecasts

Simply Wall St

Peloton Interactive, Inc. (NASDAQ:PTON) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 4.2% over the past week, closing at US$84.04. Could this big upgrade push the stock even higher?

Following the upgrade, the most recent consensus for Peloton Interactive from its 24 analysts is for revenues of US$3.5b in 2021 which, if met, would be a substantial 94% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.076 per share this year. However, before this estimates update, the consensus had been expecting revenues of US$2.7b and US$0.25 per share in losses. So we can see that this has sparked a pretty clear upgrade to expectations, with higher revenues anticipated to lead to profit sooner than previously forecast.

See our latest analysis for Peloton Interactive

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earnings-and-revenue-growth

It will come as no surprise to learn that the analysts have increased their price target for Peloton Interactive 59% to US$109 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Peloton Interactive at US$138 per share, while the most bearish prices it at US$33.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Peloton Interactive's growth to accelerate, with the forecast 94% growth ranking favourably alongside historical growth of 51% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Peloton Interactive to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that the consensus now expects Peloton Interactive to become profitable this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Peloton Interactive could be worth investigating further.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Peloton Interactive analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.