Will Peloton’s Big Move Make the Stock Double?

Will Peloton's Big Move Make the Stock Double?

This surprise acquisition makes the company’s long-term goals seem much more attainable. Chartwell Investment Partners LLC grew its position in shares of Apple Inc. (NASDAQ:AAPL) by 327.7% in the 3rd quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The fund owned 574,265 shares of the iPhone maker’s stock after acquiring an additional 439,993 shares during the quarter. Apple comprises 2.4% of […] News explorer – Search Regulatory news, RNS Search, via Company or code, Index, Industry Sector, Headline type, Release date and Source

Recently, connected-fitness company Peloton Interactive (NASDAQ:PTON) shocked Wall Street with a surprise $420 million acquisition of fellow fitness company Precor. The acquisition was Peloton’s largest, sending investors rushing to gobble up shares and analysts scrambling to adjust price targets. 

With acquisitions, there’s a lot that can go wrong. Companies can overpay for their target, leading to future writedown charges. Companies can also fail to merge operations efficiently. Because of things like this, it’s good for investors to patiently wait to see how things start playing out before getting too excited. That said, I believe Peloton’s acquisition of Precor can help its business in two ways, possibly giving the stock significant long-term upside.

A man exercises using a Peloton Bike while watching training video.

Image source: Peloton Interactive.

Peloton had its initial public offering (IPO) before the COVID-19 pandemic caused its business to boom. Going into fiscal 2020, the company’s outlook didn’t account for what was about to happen. It was expecting to end fiscal 2020 with 885,000 to 895,000 connected-fitness subscribers (74% year-over-year growth at the midpoint) and full-year revenue of $1.45 billion to $1.50 billion (61% year-over-year growth at the midpoint).

In reality, Peloton finished fiscal 2020 (ended June 30) with 1.09 million connected-fitness subscribers for 113% year-over-year growth. And it generated full-year revenue of $1.8 billion — up 100% year over year and massively outperforming the expectations from the start of the year. 

While this growth is spectacular, it came at a cost for Peloton. Its supply chain wasn’t ready to handle this growth, leading to long wait times for potential customers. According to The Wall Street Journal, the wait became unacceptably long for some, perhaps to the benefit of Peloton competitors like Nautilus. 

PTON Revenue (TTM) Chart

After years of declines, the COVID-19 pandemic reignited growth for Nautilus. PTON Revenue (TTM) data by YCharts.

Headed into calendar 2021, Peloton has four hardware products: a premium and base-model treadmill, and a premium and base-model stationary bike. Of these, Peloton’s management expects the base-model stationary bike, simply named Bike, to be the best-seller in the coming year. Therefore, recent manufacturing improvements have addressed Bike supply, and it believes Bike deliveries are now back to normal.

However, Peloton’s premium stationary bike, the Bike+, still can’t keep up with consumer demand. This problem is why the company’s acquisition of Precor is a good thing. The company will now have 625,000 additional square feet of manufacturing capability. And these facilities are in the U.S., allowing for quicker delivery to Peloton’s U.S.-based customers.

Hopefully soon, supply will completely catch back up to demand, so Peloton doesn’t cede any market share to competitors unnecessarily.

Recently, Peloton set an audacious goal of someday having 100 million members. I wouldn’t bet against this team, but that’s a really big goal, especially if you’re only targeting individual households. However, Precor’s business has a large commercial customer base (hotels, colleges, local gyms, etc.), and this expands Peloton’s addressable market.

We still lack details about how this could all work; that’s something to watch for in upcoming quarterly updates. However, imagine owning Peloton hardware at home but being able to log in to your account from a hotel or local gym and continue your daily workout regimen. This potentially makes the notion of Peloton ownership more compelling.

There’s also potential for operational synergies between Peloton and Precor. For example, Precor’s equipment has some gamification features and tracking metrics made possible through a partnership with Spivi. While we don’t yet know the future of its relationship to Spivi (a digital workout platform providing an interactive experience), one would expect some financial savings by using Peloton’s software and content moving forward.

With an expanding addressable market, Peloton’s audacious goal of 100 million subscribers suddenly sounds a lot less crazy.

A hand holds an hourglass against a sunset background, with dollar symbols floating in the air.

Image source: Getty Images.

By acquiring Precor, Peloton is expanding both manufacturing capabilities and addressable market. And that’s a fundamental business improvement that could cause its stocks to double. Of course, I make no prediction about how long it will take to double from here. However, I will make this prediction: Peloton may be up almost 500% in 2020, but that’s very unlikely to happen next year.

For some perspective, this has been an extremely unusual year for stocks. For example, consider the S&P 500 — 500 of the largest U.S. companies. According to Finviz.com, eight of these stocks doubled in 2020! That’s rare.

Likewise, Peloton enjoyed a year of historic returns that won’t be easily replicated. However, if the company can continue executing on its business plan as it has, it can create shareholder value over the years and decades to come. I don’t know how long it will take to double from here, but I do know Peloton’s business (and therefore its outlook) improved by acquiring Precor.

Source: www.fool.com

Author: Jon Quast


Apple Inc. (NASDAQ:AAPL) Shares Bought by Chartwell Investment Partners LLC

Apple Inc. (NASDAQ:AAPL) Shares Bought by Chartwell Investment Partners LLC

Apple logoChartwell Investment Partners LLC grew its position in shares of Apple Inc. (NASDAQ:AAPL) by 327.7% in the 3rd quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The fund owned 574,265 shares of the iPhone maker’s stock after acquiring an additional 439,993 shares during the quarter. Apple comprises 2.4% of Chartwell Investment Partners LLC’s portfolio, making the stock its 2nd biggest position. Chartwell Investment Partners LLC’s holdings in Apple were worth $66,505,000 at the end of the most recent quarter.

A number of other large investors have also recently made changes to their positions in the business. Amussen Hunsaker Associates LLC boosted its position in shares of Apple by 52.1% in the third quarter. Amussen Hunsaker Associates LLC now owns 92,077 shares of the iPhone maker’s stock worth $23,857,000 after buying an additional 31,552 shares during the period. Provenire Capital LLC boosted its position in shares of Apple by 29.4% in the third quarter. Provenire Capital LLC now owns 19,837 shares of the iPhone maker’s stock worth $2,297,000 after buying an additional 4,509 shares during the period. AQR Capital Management LLC boosted its position in shares of Apple by 233.4% in the third quarter. AQR Capital Management LLC now owns 18,645,608 shares of the iPhone maker’s stock worth $2,158,416,000 after buying an additional 13,053,698 shares during the period. Lombard Odier Asset Management Europe Ltd boosted its position in shares of Apple by 123.5% in the third quarter. Lombard Odier Asset Management Europe Ltd now owns 182,389 shares of the iPhone maker’s stock worth $21,122,000 after buying an additional 100,779 shares during the period. Finally, Lombard Odier Asset Management Switzerland SA boosted its position in shares of Apple by 353.4% in the third quarter. Lombard Odier Asset Management Switzerland SA now owns 131,501 shares of the iPhone maker’s stock worth $15,229,000 after buying an additional 102,497 shares during the period. Institutional investors own 59.65% of the company’s stock.

Shares of Apple stock opened at $131.97 on Friday. The company has a current ratio of 1.36, a quick ratio of 1.33 and a debt-to-equity ratio of 1.51. The company’s 50-day moving average price is $121.34 and its two-hundred day moving average price is $110.69. Apple Inc. has a 52 week low of $53.15 and a 52 week high of $137.98. The stock has a market cap of $2.24 trillion, a PE ratio of 40.48, a price-to-earnings-growth ratio of 2.83 and a beta of 1.30.

Several equities research analysts have recently weighed in on the company. Morgan Stanley upped their target price on Apple from $136.00 to $144.00 and gave the stock an “overweight” rating in a research report on Wednesday, December 16th. Cowen reduced their price target on Apple to $133.00 and set an “outperform” rating for the company in a report on Tuesday, September 1st. Citigroup increased their price target on Apple from $112.50 to $125.00 and gave the company a “buy” rating in a report on Monday, September 21st. Zacks Investment Research downgraded Apple from a “buy” rating to a “hold” rating and set a $121.00 price target for the company. in a report on Tuesday, September 29th. Finally, Macquarie reissued a “hold” rating and issued a $66.60 price target on shares of Apple in a report on Tuesday, September 8th. Three investment analysts have rated the stock with a sell rating, sixteen have given a hold rating, twenty-six have assigned a buy rating and one has issued a strong buy rating to the stock. The company has a consensus rating of “Buy” and a consensus price target of $117.35.

In other Apple news, COO Jeffrey E. Williams sold 257,343 shares of the business’s stock in a transaction dated Friday, October 2nd. The stock was sold at an average price of $113.59, for a total transaction of $29,231,591.37. The transaction was disclosed in a filing with the SEC, which is available at this hyperlink. Also, CFO Luca Maestri sold 243,431 shares of the business’s stock in a transaction dated Friday, October 9th. The stock was sold at an average price of $116.89, for a total value of $28,454,649.59. Following the sale, the chief financial officer now owns 110,272 shares in the company, valued at approximately $12,889,694.08. The disclosure for this sale can be found here. In the last 90 days, insiders have sold 563,814 shares of company stock worth $65,101,827. Corporate insiders own 0.05% of the company’s stock.

Apple Company Profile

Apple Inc designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. It also sells various related services. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and other Apple-branded and third-party accessories.

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Institutional Ownership by Quarter for Apple (NASDAQ:AAPL)

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Source: www.americanbankingnews.com

Author: ABMN Staff


News by ABERDEEN JAPAN INVESTMENT TRUST PLC Company or code - between 27 September 2020 and 27 December 2020 Time period News explorer

News by ABERDEEN JAPAN INVESTMENT TRUST PLC Company or code – between 27 September 2020 and 27 December 2020 Time period News explorer

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Source: www.londonstockexchange.com


Will Peloton's Big Move Make the Stock Double?

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