Last week, you might have seen that Peloton Interactive, Inc. (NASDAQ:PTON) released its annual result to the market. The early response was not positive, with shares down 4.2% to US$82.01 in the past week. It looks like the results were pretty good overall. While revenues of US$1.8b were in line with analyst predictions, statutory losses were much smaller than expected, with Peloton Interactive losing US$0.32 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Peloton Interactive
Taking into account the latest results, the consensus forecast from Peloton Interactive’s 24 analysts is for revenues of US$3.58b in 2021, which would reflect a huge 96% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Peloton Interactive forecast to report a statutory profit of US$0.076 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$2.71b and losses of US$0.25 per share in 2021. So we can see that the latest results have sparked a pretty clear upgrade to expectations, with higher revenues expected to lead to profit sooner than previously forecast.
It will come as no surprise to learn that the analysts have increased their price target for Peloton Interactive 59% to US$111on the back of these upgrades. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Peloton Interactive analyst has a price target of US$138 per share, while the most pessimistic values it at US$33.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s clear from the latest estimates that Peloton Interactive’s rate of growth is expected to accelerate meaningfully, with the forecast 96% revenue growth noticeably faster than its historical growth of 51%p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Peloton Interactive is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there’s been a clear step-change in belief around the business’ prospects, with the analysts now expecting Peloton Interactive to become profitable next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for Peloton Interactive going out to 2025, and you can see them free on our platform here.
Even so, be aware that Peloton Interactive is showing 1 warning sign in our investment analysis , you should know about…
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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India aims to cut crop waste burning in key farm states by 80%
By Neha Arora and Mayank Bhardwaj
NEW DELHI (Reuters) – India is likely to reduce crop waste burning, a major source of air pollution during the winter months, by 75-80% in Punjab and Haryana states, part of the country’s farm belt that borders the capital New Delhi, two government officials said on Tuesday.
Every winter, a thick blanket of smog settles over northern India, as a combination of factors such as the burning of crop residues, industrial emissions and vehicle exhaust brings a sharp spike in pollution.
Crop residue burning accounts for about a quarter of air pollution in winter months, various studies show.
The federal government and the state governments of Punjab and Haryana have ensured that rice farmers can easily hire machines to dispose of the paddy stalks and straw, said the officials, who did not wish to be identified in line with government policy.
In 2018, Prime Minister Narendra Modi’s government earmarked $177.61 million for two years to give farmers the subsidy to buy farm equipment, such as mulching and seed drilling machines, that dispose of crop waste without burning them.
For the current 2020-21 fiscal year, the government allocated $746.06 million in farm equipment subsidies.
“The subsidy programme is in its third year, and it’s going to result in a substantial reduction of up to 75-80% this year,” said one of the officials.
The farm fires could pick up in the next few weeks and hit highs in late October and early November, when farmers harvest the rice crop and prepare the ground for winter planting.
So far this year, New Delhi has experienced the longest spell of clean air on record.
“Rice harvests will start gathering momentum in the next 30 days, and that’s the time when these claims about substantially bringing down crop fires will be put to the test,” said Vimlendu Jha, an environmental expert who founded the activist group Swechha.
(Reporting by Mayank Bhardwaj and Neha Dasgupta; Editing by Alex Richardson)
Kelly Clarkson admits she ‘definitely didn’t see’ divorce coming
Kelly Clarkson addressed her divorce during the season premiere of her talk show.
The singer and talk show host opened up to her virtual Kelly Clarkson Show audience about splitting from husband Brandon Blackstock during the pandemic. While she said she will be speaking generally about her life in the second season of the show, she will be guarded when it comes to protecting the “little hearts” of their combined four brood of four.
“As you probably know, 2020 has brought a lot of change also to my personal life,” Clarkson said in her monologue. “Definitely didn’t see anything coming that came.”
She admitted, “What I am dealing with is hard because it involves more than just my heart — it involves a lot of little hearts. We have four kids. And divorce is never easy. We are both from divorced families, so we know the best thing here is to protect our children and their little hearts.”
Clarkson said that while she is “usually very open” on the show, “In this case, I will talk a little bit here and there are about how it affects me personally but I probably won’t go too far into it because I am a mama bear and my kids come first. Although I do love you all.”
She also addressed fan concern about her personally, saying, “Everyone keeps asking: Are you OK? Are you OK? And I am. The answer is yes… I know a lot of you at home unfortunately have probably been through it — either as a kid or as yourself and your own relationship. I feel you. It is a bad connection to have with people, but I will say this though: When I got upset when I was a kid, I had a problem saying how I felt. My mom told me to start writing. That’s actually how I get my feelings out. I probably won’t speak about it too much but you will definitely hear it musically.”
She said expressing her feelings through song is how she became a songwriter (“music has always been my outlet to get through difficult times”), so she dedicated premiere week to music, musicians and “the way music heals all of us.”
Clarkson filed for divorce from music manager Blackstock in June citing “irreconcilable differences.” They married in October 2013 and share two kids: daughter River Rose, 6, and son Remington, 4. He is also father to son Seth, 13, and daughter Savannah, 18, from a previous marriage.
The couple had initially been social distancing at their Montana ranch amid the coronavirus pandemic, which is where Clarkson shot remote episodes of her talk show at the end of season one. In an interview with Sunday Today earlier this month, she called her life “a little bit of a dumpster … personally, it’s been a little hard the last couple months.”
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These 3 Stocks Are Poised to Surge by at Least 50%
Is it time for the bears to break out the champagne glasses? Not so fast, says Goldman Sachs. Volatility has ruled the Street for the last few weeks, leading some to conclude that those with a more pessimistic outlook had been vindicated, but the firm believes stocks can still climb higher.
According to Goldman Sachs’ head of U.S. equity strategy, David Kostin, the S&P 500 could still hit 3,600 by the end of the year, and 3,800 by mid-2021, on the back of vaccine-related optimism and progress with the economic reopening. This would reflect gains of 10% and 16%, respectively, should the index ultimately reach these targets.
“Despite the sharp sell-off in the past week, we remain optimistic about the path of the U.S. equity market in coming months. The Superforecaster probability of a mass-distributed vaccine by Q1 2021 has surged to nearly 70% and economic data show a continuing recovery,” Kostin wrote in a recent note. On top of this, the strategist argues the vaccine’s arrival will push U.S. GDP growth to 6%, compared to the 3.9% consensus estimate.
Given Kostin’s outlook, we wanted to check out three stocks scoring major praise from Goldman Sachs. Not only have they been given a Buy rating, but the firm’s analysts also see at least 50% upside potential on tap for each. Using TipRanks’ database, we found out that all three tickers have gotten a thumbs up from analysts at other firms as well. Let’s take a closer look.
Intellia Therapeutics (NTLA)
Focused on utilizing gene editing to develop cell therapies, Intellia Therapeutics wants to stomp out cancer and other immunological diseases for good. Based on its innovative technology, Goldman Sachs recommends that investors pull the trigger.
Representing the firm, 5-star analyst Salveen Richter believes that what makes NTLA a stand-out is its “use of an adaptive gene editing system based on a proprietary lipid nanoparticle (LNP) delivery method of CRISPR/Cas9 to leverage multiple gene editing strategies.” These include the generation of knock-outs (KO) for toxic genes, restoring functional genes by inserting new DNA sequences and the use of consecutive editing combining KO and insertion approaches.
“We are positive on NTLA’s in vivo gene editing approach as it offers a modular system with CRISPR/Cas9 gene editing for functionally curative outcomes. While we note the initial focus is on delivery to the liver, extrahepatic tissue targeting (i.e. CNS) could expand the breadth of NTLA’s platform. NTLA is also leveraging its CRISPR/Cas9 editing tools ex vivo to create next-generation engineered cells that can treat oncological and immunological diseases,” Richter explained.
To this end, the analyst sees several potential catalysts on tap for the next year. Proof-of-concept data for lead program NTLA-2001, its therapy targeting transthyretin amyloidosis (ATTR), a slowly progressive condition characterized by the buildup of abnormal deposits of a protein called amyloid (amyloidosis) in the body’s organs and tissues, could come by mid-2021. This data stands to “inform the drug’s clinical profile (safety/tolerability and early signs of sustained TTR knockdown),” which would de-risk NTLA’s in vivo editing platform, in Richter’s opinion.
On top of this, IND-enabling studies for NTLA-2002, its therapy designed for hereditary angioedema (HAE), and NTLA-5001, its therapy for WT1+ acute myeloid leukemia (AML), are set to kick off in 2021. Richter estimates that peak sales for both candidates could reach $895 million and $806 million, respectively, with data from both also validating “the breadth of editing approaches (knockouts and/or insertions).”
If that wasn’t enough, Richter cites the ongoing NVS-led Phase 1/2 OTQ923 sickle cell disease (SCD) trial as a possible upside driver. “While we note the limited economics to NTLA from this program and competitor dynamics with bluebird bio’s (BLUE) LentiGlobin and CRISPR Therapeutics’ (CRSP) CTX001 that are ahead in clinical development, the study should serve as proof-of-concept for the platform. First data could be presented in 2021,” the analyst commented.
All of this prompted Richer to initiate coverage with a Buy rating and $33 price target. This target conveys her confidence in NTLA’s ability to climb 50% higher in the next year. (To watch Richter’s track record, click here)
Looking at the consensus breakdown, 3 Buys and 2 Holds have been published in the last three months. Therefore, NTLA gets a Moderate Buy consensus rating. Based on the $37.13 average price target, shares could rise 67% in the next year. (See NTLA stock analysis on TipRanks)
Vir Biotechnology (VIR)
Moving on to another healthcare company, Vir Biotechnology is developing a broad portfolio of product candidates that are designed to combat serious, global infectious diseases in new ways. With it standing at the front of the pack in the COVID-19 monoclonal antibody (mAb) race, it’s no wonder Goldman Sachs likes what it’s seeing.
Firm analyst Paul Choi cites a recent data readout from one of VIR’s competitors as reaffirming his confidence. On September 16, Eli Lilly reported interim data from the Phase 2 BLAZE-1 trial evaluating its mAb therapies, LY-CoV555 and LY-CoV016, in mild or moderate COVID-19 patients. The data revealed that treatment with LY-CoV555 led to a roughly 72% reduction in the need for hospitalization, with no safety signals observed.
Choi also points out that the results were more “pronounced” in high risk patients (age or BMI) as most study hospitalizations across both groups occurred in patients with these underlying risk factors.
While resistant viral variants did appear in 8% of LY-CoV555-treated patients and 6% of patients on placebo, management has stated that competing single or multiple mAb “cocktail” approaches might not be optimized, with viral escape mutants potentially emerging. VIR argues its approach is differentiated given the high barrier to resistance, potent effector function, potential for increased lung tissue concentration and extended half-life.
Even though VIR is behind its peers in terms of development timelines, Choi thinks that the company is making substantial progress. VIR recently initiated the Phase 2/3 COMET-ICE study of VIR-7831, its mAb for COVID-19, as a monotherapy (versus a combination approach) in patients with mild or moderate COVID-19. Initial data is set to be released by the end of 2020, with top-line data expected in January.
Weighing in on the above, Choi commented, “In the absence of preclinical binding affinity data from LY-CoV555, it is premature to hypothesize on the potential for VIR-7831 to demonstrate improved efficacy vs. the competing antibodies; however, we see the LLY data as establishing proof-of-concept for antibodies in COVID-19 while also setting an attainable bar for future antibody monotherapy/cocktail treatments. Moreover, we view the addressable market for COVID-19 antibodies as significant enough to support several approved therapies in the indication in the near-term.”
In line with his optimistic approach, Choi reiterated his Buy rating and $54 price target. Should the 5-star analyst’s thesis play out, a twelve-month gain of 69% could potentially be in the cards. (To watch Choi’s track record, click here)
Is the rest of the Street in agreement? The majority of other analysts are. 4 Buys, 1 Hold and 1 Sell have been issued in the last three months, so the word on the Street is that VIR is a Moderate Buy. With the average price target clocking in at $51.67, shares could jump 61% in the next year. (See VIR stock analysis on TipRanks)
Peloton Interactive (PTON)
Switching gears now, we move on to Peloton Interactive. The company, which offers exercise bikes and remote workout classes, rose to fame at the start of the COVID-19 pandemic. After its fiscal Q4 earnings results blew estimates out of the water, Goldman Sachs believes this stock has more room to run.
In the most recent quarter, PTON posted revenue of $607.1 million, beating the $586.2 million consensus estimate and reflecting a 172% year-over-year increase. This is up from growth of 65.6% in the previous quarter. Adjusted EBITDA came in at $143.6 million, ahead of the Street’s $73.5 million call. Management pointed to heightened demand during the COVID-19 crisis and significantly lower marketing spend as the drivers of this strong showing.
Goldman Sachs’ Heath Terry tells clients he was especially excited about the Connected Fitness segment’s performance. Connected Fitness product revenue landed at $486 million, up 199% year-over-year, while customer deposits and deferred revenue grew 300% year-over-year. The five-star analyst also highlights the fact that subscriber net adds were 205,000, versus 174,100 net adds in fiscal Q3 2020 and guidance of 154-164,000.
As for PTON’s forward-looking guidance, Terry was also impressed. “While the company guided fiscal Q1 2021 and FY21 revenue and adjusted EBITDA well above consensus, given the backlog of demand exiting the June quarter and the 6-8 weeks of deliveries already on order by consumers, we expect this guidance will again prove overly conservative,” he explained.
This performance prompted Terry to state, “We continue to believe that Peloton represents a significant long-term opportunity as the company is in the earliest stages of creating new and expanding existing categories of connected fitness products, an opportunity that we believe has been permanently accelerated by the current COVID-19 crisis.”
It should be noted that the company faces significant risks going forward. These include new entrants, evolving consumer tastes as well as execution challenges. That being said, Terry’s bullish thesis remains very much intact.
Expounding on this, the analyst said, “… we believe that the window of opportunity for any meaningful competitor is rapidly closing, something that, along with the large and expanding addressable market for Peloton’s high ARPU, high margin, extremely low churn subscription business, remains underappreciated by the market, even with the stock’s recent outperformance.”
It should come as no surprise, then, that Terry stayed with the bulls. To this end, he kept a Buy rating and $138 price target on the stock. Investors could be pocketing a gain of 53%, should this target be met in the twelve months ahead. (To watch Terry’s track record, click here)
In general, other analysts are on the same page. PTON’s Strong Buy consensus rating breaks down into 20 Buys, 2 Holds and 1 Sell. The $112.05 average price target brings the upside potential to 23%. (See PTON stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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