Here's Why Investors Should Retain Peloton Stock for Now

Peloton Interactive, Inc. PTON is likely to benefit from product innovation, deepening consumer engagement and strategic partnerships. Also, the focus on unit economics and right-sizing of costs bodes well. However, an uncertain macroeconomic environment is a concern.Growth Drivers for PTON StockPeloton is concentrating on innovation, broader market reach, enhanced member engagement and disciplined cost management to drive growth. The company highlighted significant growth in non-cycling disciplines. In the second quarter of fiscal 2025, over 2 million members engaged in Strength Training, Bootcamp, Pilate, or Yoga, accounting for 735 million workout minutes — about 75% of cycling workouts. Members participating in multiple disciplines showed a 60% lower churn rate, underlining the business benefit of fitness variety.The company made notable progress with its treadmill products, driven by targeted marketing that boosted both sales and subscription attachment rates. Peloton also launched a 10K training program, adding to its full suite of race-distance offerings. Over 300,000 members have trained for a running event using Peloton programs. Features like “Pace Targets,” offering personalized intensity levels, are enhancing user outcomes and adoption.Peloton is broadening its reach through app innovation and retail partnerships. The Strength+ app, launched in December, attracted over 220,000 monthly active users in the fiscal second quarter, mostly existing All-Access Members. Retail partnerships are also paying off, with Costco emerging as the top-performing third-party partner for Bike+ sales. International hardware sales and connected fitness subscriptions continue to gain traction.Peloton made notable strides to enhance hardware unit economics through strategic pricing adjustments. The company increased the price of its rowing machine in North America and raised prices for the Bike and Bike+ in international markets. During the holiday season, Peloton further improved unit margins by limiting the duration of promotional discounts and aligning its promotional strategy more closely with product margin profiles. These initiatives reflect a more disciplined pricing approach.Peloton’s ConcernsImage Source: Zacks Investment ResearchShares of Peloton have declined 35.4% so far this year compared with the industry’s 6% fall. The downside can be attributed to an uncertain macroeconomic environment.Peloton recently felt the impact of inflationary pressures on its operational and financial performance, with rising costs across supply chain logistics, materials and labor. Although the exact impact of inflation is difficult to quantify, the company acknowledges that these cost pressures could persist. If Peloton is unable to fully offset elevated expenses through pricing adjustments, it may face challenges in sustaining its current gross margin and managing operating expenses as a percentage of net revenues. Furthermore, the company remains vulnerable to inflation-related pressures faced by its suppliers, which could disrupt the availability or affordability of key components.PTON’s Zacks Rank & Stocks to ConsiderPeloton currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks from the Zacks Consumer Discretionary sector are  Life Time Group Holdings, Inc. LTH, American Outdoor Brands, Inc. AOUT and Ralph Lauren Corporation RL. Life Time Group presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company delivered a trailing four-quarter earnings surprise of 21.6%, on average. The stock has surged 126.4% in the past year. The consensus estimate for Life Time Group’s 2025 sales and earnings per share (EPS) implies growth of 12.9% and 37.9%, respectively, from the year-ago levels.American Outdoor carries a Zacks Rank #2 (Buy) at present. The company delivered a trailing four-quarter earnings surprise of 79.6%, on average. The stock has gained 25% in the past year.The Zacks Consensus Estimate for American Outdoor’s fiscal 2025 sales and EPS indicates growth of 3.7% and 93.8%, respectively, from the year-ago levels. Ralph Lauren presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of 6.5%, on average. The stock has gained 26.9% in the past year.The consensus estimate for Ralph Lauren’s fiscal 2025 sales and EPS implies growth of 5.8% and 16.5%, respectively, from the year-ago levels. Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ralph Lauren Corporation (RL): Free Stock Analysis Report Peloton Interactive, Inc. (PTON): Free Stock Analysis Report American Outdoor Brands, Inc. (AOUT): Free Stock Analysis Report Life Time Group Holdings, Inc. (LTH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks