Bank of America just delivered a confidence boost to Peloton Interactive (PTON, Financial), double-upgrading it to “Buy” and bumping the price target to $9 from $3.75. Investors are buzzing—Peloton's stock shot up over 9% on this news alone. Driving the excitement? Incoming CEO Peter Stern, who takes charge in January, and a path to profitability that's looking stronger by the day. The company recently delivered a surprising Q1 performance, raising its EBITDA guidance for the year. BofA analysts now predict Peloton could rake in over $300 million in EBITDA this year and see a realistic shot at hitting $400 million down the line.
This shift marks a major pivot for Peloton. What was once a cash-hungry business is now being billed as a story of debt reduction and cash flow growth, with $125 million in free cash flow projected for FY25. Peloton is aggressively expanding its subscriber base, with particular focus on treadmills (now outpacing demand for bikes) and new male-focused marketing campaigns. Plus, a holiday season partnership with Costco means a bigger retail footprint and the potential to attract more customers. With $722 million in cash on hand, the company is set to support both debt paydown and future expansion, signaling promising financial stability.
On top of that, Peloton's latest ESG report shows its commitment to sustainable growth, pushing toward 100% renewable energy by FY26—already hitting 80% coverage this year. The report highlights strides in accessibility, with new adaptive fitness programs and global community engagement. This ESG focus, paired with Stern's fresh perspective, is giving investors good reason to think Peloton has more in the tank. It's not just about cutting costs; it's about growing responsibly, attracting loyal users, and showing they're here for the long haul.
