UBS reiterates Peloton (PTON) stock short and cuts price target by more than 50%
UBS analyst Arpine Kocharyan reiterated a sell rating on Peloton (NASDAQ:) and lowered the price target to $13.00 per share from $30.00.
The lowered price target reflects lower sales and EBITDA in subsequent years, as well as weaker-than-expected profitability in the fourth quarter. Kocharyan continues to see 3 problems with Peloton.
- Higher CAC upfront when PTON needs to drastically reduce marketing spend;
- Still quite a capital intensive business; and
- Does everyone need a bike as much as a phone?
Overall, the analyst says investors will likely focus on a shift to liquidity and preserving short-term cash flow.
“PTON is on a positive cash flow path for FY23, with no indication of when PTON will achieve profitability. This positive cash flow of 23 is based on subscriber base growth in 2023. management also expects inventory to become a source of cash in 23 instead of using cash this year. $750 million over 5 years to run the business at positive free cash flow With international revenue down -3.5% YoY in the third quarter, management highlights a new opportunity to drive growth internationally, but this may require a higher reinvestment rate and the currently positive cash flow outweighs the growth,” Kocharyan said in a statement. ote customer.
By Senad Karaahmetovic