Peloton Stock Forecast: PTON Surges on Deal with Lululemon

Peloton (PTON:NSD) witnessed a remarkable 16% surge in its stock during Wednesday’s extended trading session. This response stemmed from the announcement of a transformative partnership. Peloton is set to become the exclusive digital fitness content provider for the renowned athletic apparel brand Lululemon (LULU:NSD), starting in early 2024. This five-year global alliance will also designate Lululemon as the primary athletic apparel partner of Peloton. LULU shares experienced a modest increase of 0.62% during yesterday’s after-hours trading session. This article will highlight the impact of this deal on Peloton stock forecast.

Key Highlights of the Peloton-Lululemon Deal:

Commencing November 1, members of Lululemon Studio will gain privileged access to Peloton’s dynamic digital fitness content. This content will receive weekly updates on LULU’s Studio device and companion app. Additionally, customers joining Lululemon’s free Essential membership program will enjoy exclusive Peloton offerings.

Expansion of Co-Branded Apparel:

Furthermore, co-branded athletic apparel will be available for purchase both in Peloton’s retail stores and online platforms in the U.S., U.K., and Canada, starting from October 11, 2023. The two companies aim to expand this co-branded apparel initiative to encompass all five of Peloton’s global markets by March 2024. While the financial aspects of the revenue-sharing agreement remain undisclosed, it represents a significant aspect of the collaboration.

Lululemon Streamlines Offerings:

Lululemon intends to cease the sale of its Lululemon Studio Mirror product before the year’s end. Simultaneously, the company will phase out its app-only membership tier. It is important to note, however, that Lululemon will continue to offer service and support for existing Mirror device users.

Turning Challenges into Opportunities:

At a pivotal moment, Peloton faces declining demand for its fitness equipment post-pandemic, while Lululemon, amid strong demand for its athletic wear, grappled with challenges stemming from its 2020 acquisition of at-home fitness company Mirror, which led to a substantial $443 million impairment charge in Q4 2022.

Peloton’s Stock Evaluation:

Peloton’s stock has experienced a 41% decline year-to-date, primarily driven by its weak financial performance. Recently, UBS analyst Arpine Kocharyan revised her price target for PTON stock downward to $4 from $8, reiterating a Sell rating. Kocharyan cited a shift in the trend of total interactive visits on Peloton’s website from positive to negative in July, with further weakness noted in August.

Peloton Stock Forecast:

Based on Peloton stock forecast from 20 analysts, the average target price is $ 9.54. This value ranges as high as USD 17 and as low as USD 4 for the next 12 months.

Analyst Consensus:

The average analyst rating  is categorized as “Buy.” In contrast, Stock Target Advisor’s proprietary stock analysis classifies Peloton Interactive Inc as “Bearish,” supported by 2 positive signals and 6 negative signals.

Recent Performance:

At the last closing, the stock was valued at $4.65. This price has changed by -0.43% over the past week, -20.24% over the past month and -43.29% over the last year.

Conclusion:

Peloton’s strategic collaboration with Lululemon represents a significant step towards revitalizing its market position, providing a glimmer of hope amidst recent challenges. However, the company’s stock performance has been marked by volatility, and its future trajectory remains uncertain.

Maryam Nasir