Goldman Sachs upgrades recommendation, TP on Peloton after strong quarterly results

Goldman Sachs has upgraded its rating on fitness equipment maker Peloton to “buy” following strong earnings for the last quarter. It noted the company's new initiatives aimed at platform growth and monetization amid a recent sales slump. Peloton shares have jumped more than 11% today, August 8.

The company’s financial results soothed many investor worries, noted Goldman Sachs analyst Eric Sheridan. He upgraded his rating to "buy" from "neutral" and lifted his 12-month target price from $7.00 per share to $11.50 per share, which suggests more than 61% upside versus the August 7 close.

"In total, we see PTON as a story with new [management], new initiatives aimed at platform growth and monetization for the next few years and a scope for higher incremental returns on capital in the form of free cash flow conversion," Sheridan wrote in a note to clients cited by CNBC. Peloton changed its CEO at the end of 2024, with former Apple top executive Peter Stern, cofounder of Apple Fitness+, taking over.

Sheridan added that further details from the company on these strategies could propel investor confidence over the next 12 to 18 months. He sees potential for Peloton to return to total revenue growth in the middle of fiscal-year 2026, which could then compound in the middle of the year and set the company in a “solid revision cycle.” His optimism on shares also comes from Peloton’s work on its cost base and capital structure, as well as its greater use cases and go-to market strategies of its fitness products, as CNBC wrote.

Today, Peloton was up as high as 11.5% at $7.90 per share. The stock has struggled this year, down 13% since the start of 2025 amid falling sales and subscribers, coming off peak demand during the pandemic. Peloton is up 153% over the last 12 months.

The fitness equipment maker reported results yesterday for its fiscal 2025 fourth quarter, ended June 30, which beat Wall Street expectations on key metrics. Specifically, the company reported unexpected net income of $0.05 per share, while analysts polled by FactSet had expected a net loss of $0.07 per share, writes Barron's. A year earlier, Peloton was in the red to the tune of $0.08 per share.

Peloton's revenue for last quarter fell 5.7% year over year to $606.9 million, but that's still better than the Wall Street consensus of $580 million.

The company also announced a new $100 million cost savings plan, half of which will come from cutting 6% of its workforce.

The firm also expressed concern about the first-quarter fiscal 2026 guidance, which calls for sales to decline approximately 9% year over year, worse than the roughly 6% decline in the fourth quarter of fiscal 2025, writes Investing.com.

Telsey Advisory Group maintained a "market perform" rating and its $8 per share target price for Peloton stock following the earnings. Despite the positive developments, Telsey noted that Peloton’s leadership provided limited specifics during the earnings call regarding new products and higher pricing strategies. It maintained its "market perform" rating based on concerns about stabilizing subscriber trends, the lack of a clear roadmap to sales growth, and continued pressure on consumer spending for big-ticket items

On July 30, UBS raised its rating on Peloton from "neutral" to "buy" while also upping its target price by 47% to $11 per share. It was upbeat about the upcoming earnings. UBS analyst Arpine Kocharyan said Peloton's observed improvement in online traffic could hint at a stabilizing subscriber base. 

According to MarketWatch data, Wall Street is split on Peloton: out of 21 analysts covering the company, 10 of them rate the stock a "buy" or "overweight" versus 10 "holds" and one "sell." The consensus target price is $9.20 per share, 29% above the August 7 close.

The AI translation of this story was reviewed by a human editor.