UBS upgrades rating and TP on Peloton ahead of FY4Q25 earnings; shares jump

Shares of exercise equipment and media company Peloton Interactive jumped nearly 19% today, July 30. Swiss bank UBS upgraded its rating on the stock to "buy" and raised its target price. This comes a week before Peloton is due to report quarterly earnings. UBS says it sees signs of stabilization in the business, which took off during the pandemic but has since largely lost momentum.

Today, UBS raised its rating on Peloton from "neutral" to "buy" while also upping its target price by 47% to $11 per share, implying upside of 78% versus the close yesterday, July 29.

Peloton shares have reacted with big gains: They peaked at $7.48 apiece during the day, 21% above the last close. That also marked a more than one-month high (the last time the shares traded higher was June 13). Peloton met the close at $7.34 per share, up 18.8% for the day.

As CNBC writes, the investment bank is optimistic about the financial results for the fourth quarter of fiscal 2025, which the company is set to release on August 7.

UBS analyst Arpine Kocharyan said Peloton's observed improvement in online traffic could hint at a stabilizing subscriber base. In the fiscal-2025 third quarter, Peloton reported an 8% year-over-year and a 1% quarter-over-quarter decline in fitness subscribers to 6.1 million, though in cash terms, the drop was not as pronounced, at 4% year over year and no change quarter over quarter, at $418.5 million. 

Peloton has raised subscription prices. "While we see subscription price increases anchoring near-term top line growth," Kocharyan argues, "we might also see underlying net subscriber decline stabilizing into FY′26, outside of price increase driven churn."

UBS also sees upside to Peloton’s fiscal-year 2026 EBITDA guidance from further top-line growth and cost-cutting measures. The company has revised upward its EBITDA guidance already twice this year, albeit only for fiscal 2025 so far. It first raised it by a quarter to $300-350 million, before lifting the lower end of the range by another 10% to $330 million, leaving the higher end unchanged.

Peloton's business boomed during the pandemic as people bought home fitness equipment and signed up for online courses amid gym closures. At the beginning of 2021, the company's shares traded over $171 per share, 23 times current quotes. 

After the lockdowns were lifted, many people went back to gyms, causing demand for Peloton products to drop. Last year, Peloton announced a restructuring that was meant to cut annual costs by $200 million by the end of this year. 

On January 1, the company announced changes in its management: The new CEO would be Peter Stern, formerly of Apple and Ford. The following month, Peloton printed mixed results for its fiscal-2025 second quarter: Revenue and adjusted EBITDA beat Wall Street expectations, but the loss was worse than expected. At the time, Stern assured that the company was paving the way for growth. 

In March, Canaccord analysts upgraded Peloton from a "hold" to a "buy." They reasoned that the company is going through a transition and will return to growth in fiscal 2026. 

A month later, Wall Street veteran Stephen Guilfoyle published an analysis of the stock on TheStreet Pro. He pointed out that the company's balance sheet is "not nearly as weak as many may believe," while it has almost no short-term debt. 

Peloton is down nearly 16% year to date but up 105% over the last 12 months. 

Wall Street is split on the outlook for the stock: 10 coverage analysts rate it a "buy" versus 10 "holds" and one "sell," according to MarketWatch. Their average target price of $9.38 per share suggests upside of about 52% to the stock's July 29 closing price. 

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