Peloton Stocks Surge as UBS Upgrade Leads to Cost-Cutting Measures

A Peloton stationary bicycle inside a store in Palo Alto, California — David Paul Morris, Bloomberg via Getty Images

The Key Takeaways

UBS upgraded Peloton Interactive stock to "neutral" from "sell" on optimism about the fitness and equipment firm's moves to reduce expenses.
Analysts have also raised their price target from $2.50 to $10.00.
UBS has said it will also be resetting the company under the leadership of new CEO Peter Stern. He is set to take over in the next few months.

UBS raised its price target and upgraded Peloton’s stock, which reflects the company’s efforts to cut costs.

The bank lifted its rating to "neutral" from "sell," and boosted the price target to $10.00 from $2.50.

In a client note, the analysts stated that due to the lower costs and operating expenses they expect earnings before interest taxes depreciation amortization (EBITDA), which is more than the estimated $200 million by Peloton.

Peter Stern, a former Ford executive and new CEO of the company who will take over in January, was also mentioned. UBS stated that the new change was a good opportunity. “to further reset the bar against buyside expectations that are more reasonable now.” Stern is a more organized setup, according to the analysts “to register early success with low hanging fruit growth initiatives such as subscription pricing increase.” Also, they said that the compensation he receives is fair. “tied to revenue/operating income and EBITDA/free cash flow performance.”

Peloton shares rose 8% recently to $10.39. This is their highest price since April 2023.

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