- Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating for Peloton Interactive Inc (NASDAQ:PTON), citing the lack of visibility into demand levels, profitability, and cash flow.
- The analyst also lowered the price target to $11 from $15, implying a 22% upside.
- Related: Peloton Exits In-House Production As Part Of Turnaround
- The analyst said the company’s decision to shut down internal manufacturing is not surprising given ongoing changes in the business model to reduce fixed costs, transition to a more variable cost structure, and reduce the cash burn.
- The analyst noted that PTON’s new CEO, Barry McCarthy, expressed his view of focusing on content and subscriptions.
- The change should provide cost savings in FY24, in addition to the $800 million in cost savings previously identified.
- However, there is a risk in relying on a single supplier for the welding and assembly of most of its products, although the analyst notes that Peloton has dual sources for some components.
- Price Action: PTON shares are trading lower by 3.73% at $8.90 on the last check Wednesday.
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