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Peloton (PTON, Financials) just got a vote of confidence from Truist Securities, which upgraded the stock to Buy for the first time in three years. The firm says the fitness brand is starting to turn the cornerwith a clearer path to profits and better control over its finances under new CEO Peter Stern.
Truist set an $11 price target, pointing to leaner operations and stronger liquidity. The company's net debt-to-adjusted EBITDA ratio improved to 2.7x in Q2, down sharply from 7x just a quarter earlier.
Stern, who took over in January, is keeping his focus on hitting near-term profitability goals before ramping up growth efforts. The cost-cutting playbook includes multiple layoffs and restructuring moves that now put Peloton ahead of its $200 million savings target. Management is expected to lay out longer-term plans in the August earnings call.
Truist says the stock is mostly de-risked at current levels, with visibility improving not just in the numbers, but in leadership's messaging. The company is building momentumbut analysts warn the full turnaround could take time.
Eyes are now on August, when management is expected to offer a deeper look into its next phasepossibly including growth initiatives tied to partnerships.
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This article first appeared on GuruFocus.