PTON Slammed With Downgrade Amid Demand Concerns

Most analysts are still bullish towards Peloton stock

Deputy Editor
Jul 14, 2021 at 9:56 AM
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Peloton Interactive Inc (NASDAQ:PTON) is off 4.4% at $114.58 this morning, following a bear note from Wedbush. The analyst downgraded the at-home workout name to "neutral" from "outperform," and cut its price target to $115 from $130, noting slowing growth as the company heads towards the "next leg of its growth story." Wedbush added it will be staying on the sidelines until it sees stronger demand for Peloton products in a post-pandemic environment. 

Growth has, indeed, been shaky for the fitness stock, which is currently down 21% year-to-date, with notable pressure coming from the $125 to $130 region. The equity recently breached a long-time ceiling at its 120-day moving average, though, which may contain some of today's losses. 

The majority of analysts are still bullish towards Peloton stock. Of the 23 in coverage, 19 call it a "buy" or better. Plus, the 12-month consensus price target of $132.04 is a near 14.4% premium to current levels.

Meanwhile, short interest is on the rise, climbing 9.4% in the last two reporting periods. The 22.35 million shares sold short now make up a hefty 8.8% of the stock's available float. 

Options traders have also taken a more pessimistic stance. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PTON sports a 50-day put/call volume ratio of 1.13, which stands higher than 76% of readings from the past 12 months. This means long puts are being picked up at a quicker-than-usual clip. 

Drilling down to today's options activity, 8,677 calls 8,113  puts have crossed the tape, which is twice the intraday average. Most popular is the July 125 put, followed by the 115 put in the same series. 

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