Peloton stock strikes record high after Precor offer

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Peloton to acquire fitness equipment maker Precor for $420 million

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Shannon Stapleton | Reuters

Peloton shares increased to a record Tuesday after the business revealed strategies to purchase workout devices producer Precor for $420 million.

In early trading Tuesday, the stock was at an intraday record of $160.56, up 11.2% from Monday’s close of $144.39.

Telsey Advisory Group expert Dana Telsey stated she anticipates the offer might increase Peloton’s yearly sales by $480 million to $500 million, presuming Peloton maintains Precor’s income. The offer is anticipated to close early next year. Once completed, Precor will run as an organization system within Peloton and continue to make its own top quality items, the business stated.

The offer need to permit Peloton to speed up production and reduce preparations, “which should boost sales and improve the customer experience,” Telsey stated in a note to customers. She raised her rate target on shares to $180 from $145.

Demand for Peloton’s workout devices has actually risen throughout the coronavirus pandemic, straining its supply chain, as customers try to find methods to exercise in your home. When Peloton reported quarterly revenues in November, it cautioned that it would be running under supply restrictions “for the foreseeable future.”

Peloton will get Precor’s more than 625,000 square feet of producing area and include almost 100 research-and-development workers.

“Increased manufacturing capacity should help alleviate the biggest impediment to growth,” KeyBanc Capital Markets expert Ed Yruma stated in a customer note. He raised his rate target to $185 from $160.

Peloton shares have actually risen more than 400% year to date. The high-end cycle and treadmill maker has a market cap of $42.2 billion.