Peloton Interactive (NASDAQ:PTON) has turned a corner, reporting a profitable quarter as reductions in marketing and R&D expenses helped offset declining memberships and revenue. Despite forecasting another revenue dip for FY26, the company expects improved margins, bolstered by a cost restructuring plan targeting at least $100M in annualized savings by the end of next year.
This progress has earned Peloton an upgrade from Goldman Sachs, which now rates the stock as a Buy with a price target of $11.50, up from $7. This represents a 62% upside from Thursday’s closing price.
Goldman Sachs analyst Eric Sheridan expressed optimism, stating, “We see the potential for a return to revenue growth by mid-FY26, which could then accelerate beyond our current projections, positioning Peloton for a strong revision cycle over the next 12–18 months.”
However, not everyone shares this bullish outlook. Many Seeking Alpha contributors maintain a consensus Sell rating on Peloton, citing concerns over rising debt, increasing interest expenses, and share dilution. Analyst Manuel Paul Dipold highlights these financial risks, noting, “While some margin metrics are improving due to cost savings, key indicators like equipment sales and subscription revenue remain stagnant or in decline. Without improvement in these areas, revenue and profitability growth remain unlikely.”
Sheridan acknowledges the challenges, including declining revenue through early FY26 and potential tariff impacts. However, he believes these hurdles could be mitigated by AI-driven personalization and expanded partnerships to fuel growth. Additionally, Peloton has shown progress in better monetizing its subscriber base.
“We view Peloton as a company with new management, fresh initiatives focused on platform growth and monetization, and the potential for higher returns on capital through free cash flow conversion,” Sheridan explained. He added that as the company provides more clarity on its strategies and execution, investor confidence could strengthen over the next 12–18 months.
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