Cari Gundee rides her Peloton exercise bike home on April 6, 2020 in San Anselmo, California.
Ezra Shaw | Getty Images
Shares of Peloton fell on Tuesday after UBS downgraded shares to sell from neutral, saying an incredible rise over the past year leaves more downside risk for investors here.
Shares have recently fallen nearly 7%, after hitting about 370% from last year.
“Given recent market activity, we believe investors should be wary of the upward trend in bullish market optimism in a handful of companies that have been“ beneficiaries ”of Covid-19 and / or or they have hit public markets in the last 6-18 months, ”UBS analyst Eric Sheridan said in a note to clients.
The investment firm raised its Peloton stock price target to $ 124 from $ 115, adding that it still believes the company has a “long-term opportunity to disrupt conditioning business models. traditional physicists “. Shares opened Tuesday at $ 152.55. On January 14, it hit an all-time intraday high of $ 171.09.
Over the weekend, the New York Times also published an article in Peloton that highlighted how the company’s social media account “has become a beacon for outrage over late deliveries and hours spent on customer service representatives “.
Peloton has experienced incredible growth during the Covid-19 pandemic, with more people wanting to work away from home and many gyms having been forced to close. But he has struggled to keep up with demand. The manufacturer of high-end cycles and tapes has experienced adverse reactions from customers who do not receive their orders on time and who experience delays for weeks, sometimes with little or no notice.
Late last year, the company paid $ 420 million to acquire Precor, a U.S.-based fitness manufacturer, to enable it to make its products faster and closer to customers ’homes. But it is likely that time will pass for these efforts to produce positive results. In November, Peloton said it hoped to operate under supply restrictions “in the foreseeable future.”
“The current valuation reflects a high level of investor confidence in Peloton’s ability to deliver large operating results (especially between logistical / operational challenges …),” UBS Sheridan said.