Last Update 09 Feb 26

Fair value Decreased 23%

PTON: Future Execution On Engagement And Retention Will Offset Recent Setbacks

Peloton Interactive's fair value estimate has been reduced from $10.43 to $8.08 as analysts reset price targets across the Street. This reflects updated assumptions for subscriber trends, margins, discount rates, and future P/E multiples following recent research updates.

Analyst Commentary

Recent Street research on Peloton shows a cluster of reduced price targets, with most firms updating their models after earnings and recalibrating expectations for subscribers, churn, and profitability. While the fair value estimates have moved lower overall, the commentary still splits into areas where analysts see potential and areas where they remain cautious.

Bullish Takeaways

Bullish analysts who raised or maintained targets highlight that updated models after recent earnings still support some upside relative to prior internal assumptions, even with more conservative inputs.
The target increase to US$6.50 from US$6 suggests that, for some, execution in recent quarters was at least in line with their revised expectations. They factor this into valuation despite broader target cuts elsewhere.
Maintained Neutral and Equal Weight style ratings in several notes indicate that, while price targets were adjusted, some analysts still see Peloton as reasonably aligned with its risk and reward profile rather than uninvestable.
Incremental model tweaks around subscriber levels and margins, rather than wholesale changes, imply that bullish analysts view recent results as manageable within their existing long term frameworks.

Bearish Takeaways

Bearish analysts trimmed price targets by US$1.50 to US$5.50, indicating lower assessed upside in their models as they incorporate updated assumptions for growth, churn, and profitability.
The reduction of subscriber estimates by 3% for the full year, tied to expectations of greater churn, directly feeds into lower revenue and earnings projections and, in turn, lower valuation multiples.
Several target cuts reference post earnings model resets, which suggests concern that prior expectations for user growth and margin improvement may have been too optimistic.
With multiple firms lowering their fair values in a short time window, the recent research cycle frames Peloton as needing stronger execution on subscriber retention and cost control to support higher P/E or revenue multiples.

What's in the News

Peloton plans to cut 11% of its staff, including roles in engineering, as reported by Bloomberg, with multiple summaries reiterating the same announcement (Periodicals).
The company issued earnings guidance for Q3 2026, with expected revenue of US$605 million to US$625 million, and for fiscal 2026, with expected revenue of US$2.40b to US$2.44b, both described as lower year over year at the midpoints and lower than the prior outlook (Key Developments).
Peloton announced that Chief Financial Officer Liz Coddington will leave the company to pursue an opportunity outside the industry, and a search is underway for a new CFO, with Coddington remaining through March (Key Developments).
Bloomberg reported that Peloton's Cross Training Series of AI powered bikes and treadmills is seeing modest traction in retail stores in the first eight weeks, with store managers citing interest from customers but limited sales conversion so far (Periodicals).
Peloton and Respin Health released results from a 60 day program for women in perimenopause and menopause, where 84% of the 267 participants reported overall symptom improvement across all 35 tracked symptoms, alongside lower sitting time and better sleep quality (Key Developments).

Valuation Changes

Fair Value Estimate, reduced from US$10.43 to US$8.08, reflecting a lower assessed equity value per share based on the updated model inputs.
Discount Rate, increased from 8.49% to 9.04%, indicating a higher required return applied to Peloton's projected cash flows.
Revenue Growth, adjusted from 2.78% to 2.67%, reflecting slightly more conservative assumptions for future top line expansion.
Net Profit Margin, revised from 7.23% to 7.05%, pointing to modestly lower expected profitability on future revenue.
Future P/E, moved from 35.32x to 29.32x, implying a lower valuation multiple applied to Peloton's expected earnings.

Expanding into holistic wellness, commercial partnerships, and new accessibility initiatives aims to broaden Peloton's audience and diversify revenue streams.
Focus on operational efficiencies, cost reduction, and asset-light strategies is expected to improve margins and support long-term growth.
Declining demand, increased competition, and macroeconomic pressures threaten revenue growth, margin expansion, and sustained profitability, raising doubts about Peloton's long-term financial outlook.

Catalysts

About Peloton Interactive

Provides fitness and wellness products and services in North America and internationally.What are the underlying business or industry changes driving this perspective?

Peloton is leveraging advanced technologies-including AI-powered personalized coaching and human-driven community features-to broaden its offerings from cardio into holistic wellness (strength, sleep, stress, nutrition), which aligns with growing global health consciousness and should support future subscription revenue growth and higher engagement/churn reduction.
The company is investing in new, lower-cost accessibility initiatives (secondary market "Repowered" platform, student/military/first responder discounts), and expanding tiered digital offerings like Strength+, targeting broader demographics and making the premium Peloton ecosystem available to a wider customer base, potentially driving both hardware and digital subscriber growth over time.
Expansion into commercial fitness (integrating Precor and Peloton for Business, new international markets and hotel/retail partnerships) positions Peloton to capture the broader shift toward connected, omni-channel/hybrid fitness experiences while diversifying revenue streams beyond consumer at-home, potentially supporting topline growth and margin improvement via scale.
Ongoing operational improvements-including cost reduction efforts, optimizing indirect spend, and a strategic shift toward higher-margin, asset-light models-are expected to drive continued gross and net margin expansion, as reflected in recent and forecasted improvements in adjusted EBITDA and free cash flow.
The long-term proliferation of connected devices and IoT, coupled with increased remote/hybrid work, creates continued tailwinds for at-home and digitally connected fitness solutions, enhancing Peloton's total addressable market and supporting a return to sustainable revenue and earnings growth if the company executes effectively.

Peloton Interactive Earnings and Revenue Growth

Peloton Interactive Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Peloton Interactive's revenue will decrease by 0.4% annually over the next 3 years.
Analysts assume that profit margins will increase from -4.8% today to 4.5% in 3 years time.
Analysts expect earnings to reach $113.2 million (and earnings per share of $0.23) by about September 2028, up from $-118.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $194.3 million in earnings, and the most bearish expecting $-55 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 55.1x on those 2028 earnings, up from -26.1x today. This future PE is greater than the current PE for the US Leisure industry at 23.9x.
Analysts expect the number of shares outstanding to grow by 6.9% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.39%, as per the Simply Wall St company report.

Peloton Interactive Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Declining hardware sales and subscriptions, as indicated by consecutive year-over-year decreases in Paid Connected Fitness subscriptions (Q4 subscriptions down 6% YoY) and guidance forecasting further declines in both hardware unit sales and subscriptions for Q1 and the full fiscal year, suggest category saturation and lower demand-posing risks to long-term revenue growth and top-line stability.
Increased competition from both low-cost/free digital fitness providers and major tech/hardware entrants, combined with ongoing consumer demand for in-person or hybrid experiences, may further erode Peloton's pricing power, customer loyalty, and subscription revenue, negatively impacting gross margins and net earnings.
Persistent reliance on price adjustments, promotional activities, and broadening value propositions (e.g., wellness expansion, tiering, secondary market growth) rather than clear evidence of organic subscription/member growth indicates difficulty in driving new customer acquisition and retention, threatening sustained revenue and margin expansion.
Macroeconomic headwinds-including discretionary spending constraints from inflation, higher interest rates, and exposure to evolving tariffs on imported equipment-introduce volatility and potential downside to consumer demand for premium fitness equipment and subscriptions, adversely affecting free cash flow and net margins.
Challenges in cost reduction sustainability (after harvesting low-hanging fruit from past restructurings), ongoing restructuring costs, and high stock-based compensation further constrain operating leverage and margin expansion-raising concerns about the company's ability to maintain improved profitability and earnings trajectory over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $9.841 for Peloton Interactive based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $20.0, and the most bearish reporting a price target of just $5.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.5 billion, earnings will come to $113.2 million, and it would be trading on a PE ratio of 55.1x, assuming you use a discount rate of 8.4%.
Given the current share price of $7.6, the analyst price target of $9.84 is 22.8% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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