Stay-at-Home Staple Soaring on Entrance Into Australian Market

MKM Partners is bullish on Peloton stock despite a shaky 2021 performance

Deputy Editor
Mar 9, 2021 at 9:21 AM
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The shares of Peloton Interactive Inc (NASDAQ: PTON) are surging in pre-market trading, last seen up 4.3% at $105.75, after the stay-at-home workout staple announced its expansion into the Asia-Pacific region. Specifically, Peloton hopes to sell its fitness Bike, the pricier Bike+, and its interactive membership app in Australia by the second half of 2021, but did not say when other products would be available in the region.

Ahead of today, Peloton stock had been retreating on the charts since soaring to an all-time high of $171.09 on Jan. 14. Further, the now descending, 10-day moving average has thwarted comeback attempts since mid-February when the security fell below the $140 level -- home to the stock's 2020 highs. Already in 2021, the equity has shed 33.2%.

Meanwhile, PTON earned at least one bull note in the form of an upgrade from MKM Partners. The firm raised the equity to "buy" from "neutral," noting that the recent selloff gives Peloton stock an "attractive" buying opportunity. The majority of analysts were already optimistic toward the security coming into today. In fact, 19 of the 23 in coverage sport a "buy" or better rating. Plus, the stock's 12-month consensus target price of $166.35 is a 64.1% premium to last night's close.

The options pits have been unusually bearish, though. This is per the stock's 10-day put/call volume ratio of 2.07 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all other readings in its annual range. In simpler terms, this implies a healthier-than usual appetite for puts of late.

For those looking to speculate on PTON's next move with options, premiums are quite affordable at the moment. The security's Schaeffer's Volatility Index (SVI) of 81% sits in the relatively low 21st percentile of its annual range. This means options traders are pricing in relatively low volatility expectations. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) sits at 85 out of 100, indicating Peloton stock has exceeded volatility expectations during the past year.


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