By Christiana Sciaudone
Investing.com -- Peloton (NASDAQ:PTON)'s high ride was cut short as the stock got downgraded with a post-Covid world in sight.
UBS bumped the bike maker to sell from neutral -- the company's only sell rating, according to data compiled by Investing.com -- with a price target of $124 from $115, StreetInsider reported. Shares tumbled about 7%. The stock rose by more than 500% from its trading debut in 2019 to a record last month.
Peloton gained steam after the spread of the coronavirus forced gyms to close and people to seek out alternatives to keep fit while stuck at home. Sales were so successful, in fact, that the company has struggled to supply the demand, prompting some customers to look elsewhere, and Peloton to buy a U.S. manufacturer of gym equipment to try to keep up.
"While we still think Peloton has a long term opportunity to disrupt traditional fitness business models, we downgrade it to Sell to risk/reward skewed to the downside from current levels," UBS's Eric Sheridan wrote in a note, according to StreetInsider. "Additionally, we update our model to reflect the Precor acquisition (expected in close in early calendar year 2021) and lower our out-year revenue estimates (FY'23-'25) to reflect more normalized growth rates after COVID-19."
Most analysts are loving Peloton, which has 20 buy ratings, two holds and Sheridan's lone sell.
Sales have grown from $228 million in the quarter ended Sept. 2019 to almost $758 million a year later, with a loss per share of $1.29 flipping to a gain of 20 cents a share.