Shares of fitness equipment maker Peloton (PTON) gained in today’s trading as investors await its Q4 earnings results on August 22 before the market opens. Analysts are expecting earnings per share to come in at -$0.17 on revenue of $627.4 million. This equates to a 75% EPS increase and a -2.2% revenue decrease on a year-over-year basis.
Interestingly, it’s worth noting that Peloton has missed earnings estimates every quarter since its 2021 Q4, and there is reason to expect this losing streak will continue. In fact, Peloton is still searching for a new CEO after Barry McCarthy stepped down in May due to disappointing Q3 results. This has likely caused the company to run suboptimally, which increases uncertainty and the chances of missing estimates.
This uncertainty is also a concern for analysts, according to TipRanks’ Bulls Say, Bears Say tool pictured below. And while the company is focused on cutting costs, this will likely lead to slower growth that could offset the benefits of lower costs.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 21% move in either direction.
Is PTON a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Hold consensus rating on PTON stock based on three Buys, 15 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 54% decline in its share price over the past year, the average PTON price target of $4.14 per share implies 27.78% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
