Peloton (PTON) Stock Forecast & Price Target

Peloton Interactive Inc. reported a significant gross margin of 47.2%, reflecting a year-over-year increase of 690 basis points, which exceeded both internal guidance and market expectations, indicative of strong performance in its Connected Fitness Subscription segment. The company's forecast for FY26 anticipates a modest sales increase to $2.50 billion, with expectations for the percentage of gross profit from subscriptions to rise from approximately 35% to 60% over time, emphasizing the growing importance of this revenue stream. Enhanced profitability in the recent quarter, driven by improved marketing efficiency and robust unit economics, has led to a notable upward revision of the company's adjusted EBITDA and free cash flow guidance, reinforcing a positive outlook for Peloton's financial trajectory.

Peloton Interactive Inc. has reported a significant decline in connected fitness product sales, dropping 21% year-over-year to $253 million, which raises concerns about the sustainability of its revenue streams amidst increasing reliance on subscription services. While churn rates for connected fitness subscribers decreased to 1.4%, the firm is still projected to experience a 7% decline in connected fitness subscribers in FY'25E, with a return to growth not expected until FY'29E. Additionally, total sales fell by 9% to $674 million, reflecting continued challenges in both hardware sales and the overall subscription market, suggesting persistent headwinds for Peloton's financial performance.