Analysts’ Optimism About Peloton (PTON) Stock After Precor Deal

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Peloton announced the acquisition of Precor, a maker of fitness equipment. The deal is priced at 420 million dollars. At the close of trade on Wednesday, the shares increased by 0.96 percent to $16276.

With the acquisition of Precor, the construction of production facilities in the United States is expected. Precor expects a rise in research and development in the area of cardio and strength training with the support of a knowledgeable team. Until the end of 2021, the production of Peleton fitness products in the United States is scheduled.

“By combining our talented and dedicated teams and supply chains with the incredibly capable Precor team and their decades of experience, we believe we can become leaders in the online fitness market in both scale and innovation,” said William Lynch, President of Peloton.

Precor is currently a subsidiary of Amer Sports, the Finnish sporting goods company.

At the beginning of November, Peloton presented its third quarter 2020 financial results. All of the key indicators for the company rose. This was facilitated by the pandemic, which closed gyms and forced people to work out at home because of it.

Management has said, however, that it does not have time to satisfy the rising demand. That day, the stock was down 7 percent. Peloton will be able to solve its manufacturing problems and greatly grow if the purchase of Precor is successful. This has now been the reason for the rise of Peloton’s shares, which gained traction of abou 21% over the week.

Peloton will earn approximately 58,000 square meters of manufacturing space in the United States as part of the contract. Precor sells commercial stationary bikes, elliptical machines, weight lifting equipment, and treadmills. Gyms, hotels, campuses, and other organizations buy equipment.

So far, the business of Peloton has concentrated on sales to private clients, but the company plans to use the channels of Precor to develop corporate sales.

On Tuesday, two of the analysts firms came raising their price targets for the Peloton’s stock. Telsey Advisory Group raised its target from $148 to $180 while JMP Securities raise it to $162 from previous target price of $145 for the PTON stock.

Based on average of these two targets assigned to the stock this week, we can see a mid-term growth of about 6% in the coming weeks.

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