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Peloton Interactive’s Price Target Cut at UBS

UBS analysts slashed their price target for Peloton Interactive (NASDAQ:PTON) to $2.50 from $4.00, while maintaining their Sell rating on the stock. The adjustment reflects lowered expectations for revenue and profitability due to ongoing uncertainties around subscription growth and the company’s ability to generate positive cash flow through growth initiatives. However, the analysts noted that positive cash flow could still be achieved through cost reductions, suggesting that Peloton’s management might reconsider its cost structure in light of the poor conversion rates of app users to connected fitness subscribers following the May revamp of the Peloton app.
An analysis of Peloton’s website traffic showed a positive trend in March, following a drop in January and a slight increase in February. This analysis considered total interactive visits, excluding those who leave the site without interaction. Despite the year-over-year comparisons showing easier conditions due to a significant drop last March, the recent promotional activities may have temporarily boosted these metrics. Despite these fluctuations, investor focus appears to be shifting towards the growth of connected fitness subscriptions in 2025, especially as the new tiered app membership and relaunched app have not driven the expected conversions to connected fitness.

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