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Peloton Interactive vs. Planet Fitness: Which Fitness Equipment Stock is a Better Buy?

The fitness industry has experienced tremendous growth in the last ten years and according to a PolicyAdvice article from earlier this year, the global gym industry was was worth $96.7
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The fitness industry has experienced tremendous growth in the last ten years and according to a PolicyAdvice article from earlier this year, the global gym industry was was worth $96.7 billion in 2020.

Using the TipRanks Stock Comparison tool, let us compare two fitness companies, Peloton Interactive and Planet Fitness, and see how Wall Street analysts feel about these stocks.

Peloton Interactive (PTON)

Peloton Interactive has been a disruptor in the fitness industry with a subscription platform that is equipped with proprietary network software and streams digital wellness and fitness content. The company generates most of its revenues through the sale of its connected fitness products including Bike+, Peloton Bike, Tread+, and the Peloton Tread, and recurring subscription revenue associated with these products.

Earlier this month, Peloton announced its fiscal third-quarter results where revenues jumped  141% year-over-year to $1.26 billion. However, the company reported a loss of $0.03 per share that narrowed from a loss of $0.2 per share in the same quarter last year.  

Peloton’s paid Digital Subscriptions surged by a hefty 404% to around 891,000 in Q3, while Connected Fitness Subscriptions jumped 135% to over 2.08 million.

In the fiscal fourth quarter, Peloton expects the recall of its Tread and Tread+  treadmills to cost the company $165 million. The company initiated a recall of these treadmills after a U.S. Consumer Product Safety Commission’s (CPSC) report claimed the Tread+ was unsafe following 39 injury incidents involving the product in addition to one child’s death.

The recall of Tread and Tread+ is also likely to impact the company’s subscription revenues by $10 million in fiscal Q4 as Peloton is waiving monthly subscription access fees for both Tread and Tread+ members for three months.

Peloton anticipates revenues of $915 million in Q4 and $4 billion in FY21. This revenue forecast for FY21 includes $60 million of Precor revenues. In April this year, the company completed the acquisition of Precor, a fitness equipment company for $420 million in cash.

The company expects Bike and Bike+ sales in Q4 to be three times its sales in Q4 FY19 and anticipates the growth of its Bike portfolio to continue in FY22.

Peloton’s international business is growing at a faster pace than in the United States. The company is ramping up its marketing activity spend and word-of-mouth publicity is contributing to rising memberships.

Due to these factors, in FY21, the company expects connected fitness subscriptions to be worth $2.275 million. Over the long term, Peloton anticipates that the subscription contribution margin will exceed 70%.

The company has also announced plans to set up its first U.S. factory in Ohio’s Troy Township for $400 million. This production facility will be called Peloton Output Park and will produce Peloton’s bike and tread products. Construction of the facility will start this summer, while production is expected to begin in 2023.

While it builds its own manufacturing plant in the U.S., Peloton plans to continue using its contract factories in Asia. (See Peloton Interactive stock analysis on TipRanks)

Peloton CEO John Foley  said about the factory, “The new Peloton Output Park gives us a massive strategic lever to make sure we have capacity, quality, and economies of scale in our bike and tread product lines, to support our continued growth for years.”

The company is also looking at beginning limited production of its products at Precor’s facility in North Carolina by the end of this year and aims to ramp up production next year.

On May 24, UBS analyst Eric Sheridan reiterated a Sell and a price target of $74 on the stock. The analyst stated that data from the UBS Evidence Lab indicated that adoption of the Peloton Digital app fell 3% to 4% year-over-year in April and by one more percentage point in May.

Sheridan commented on the data in a note to investors, “We believe these data points can be a useful proxy for overall adoption trends of Peloton both in the U.S. and internationally, as well as the competitive landscape for other fitness and wellness offerings. Peloton views its digital app as a primary lead generation channel that has also been growing the fastest among other channels.”

Consensus among analysts on Wall Street is a Moderate Buy based on 18 Buys, 4 Holds, and 1 Sell. The average analyst price target of $131.19 implies 19.7% upside potential to current levels.

Planet Fitness (PLNT)

Planet Fitness is a fitness brand whose business model differs from Peloton. The company generates revenues through a franchising business, corporate-owned brick-and-mortar stores, and the sale of its fitness equipment. Currently, the franchising business operates in the United States, Puerto Rico, Canada, Mexico, Australia, and Panama.

However, the company is also exploring a digital subscription strategy and offers a digital subscription plan, PF+, priced at $5.99 per month. The company stated at its earnings call that more than 30% of its digital subscription members joined Planet Fitness gyms after subscribing, while 65% of PF+ members had visited its bricks-and-mortar gyms since subscribing.

Planet Fitness is planning to do a test run of PF+ for price elasticity in a limited number of gyms this year where it will bundle classic and black card memberships with a PF+ subscription. It expects to share “more possible offerings in early 2022”.

Planet Fitness’ CEO, Chris Rondeau said at its earnings call, “I believe that the future of the fitness industry is truly about bricks with clicks, the powerful combination of providing people with a high-quality in-person fitness experience, coupled with the ability to engage and service them outside our four walls with differentiated premium content wherever they are.”

To extend its digital strategy, the company acquired a minority stake in iFIT earlier this month. iFit is a developer of interactive software and content and a seller of fitness equipment.

The company’s gyms are typically 20,000 square feet and a standard membership is priced at $10 per month. As of March 31, the company had 14.1 million members with memberships growing sequentially in every month of Q1 as restrictions were lifted and more people got vaccinated. The company had 2,146 stores at the end of Q1 of which 2,043 are franchised stores while 103 are owned by corporates.

Earlier this month, PLNT announced first-quarter results where total revenues declined 12.1% year-over-year to $111.9 million and the company reported diluted earnings of $0.07 per share versus $0.11 in the same quarter last year.

The company refrained from providing an outlook for FY21 as a result of the uncertainty due to the COVID-19 pandemic. (See Planet Fitness stock analysis on TipRanks)

Earlier this month, following the company’s earnings, Berenberg Bank analyst Alex Maroccia reiterated a Hold rating and lowered the price target from $91 to $78 on the stock. Maroccia said in a research note to investors, “The company reported a mixed set of results yesterday, seeing an uptick in the overall membership base for the first time since Q1 2020 but experiencing continued difficulties in equipment replacements and new placements.”

“On a positive note, at the time of earnings, the company announced a new partnership with and investment in digital fitness brand iFIT, which we believe can drive meaningful "omnichannel" revenues in the future. Despite this positive long-run growth driver, we struggle to see upside in the company's current valuation,” Maroccia added.

Consensus among analysts on Wall Street is a Moderate Buy based on 2 Buys and 5 Holds. The average analyst price target of $87.83 implies 9.5% upside potential to current levels.

Bottom Line

Peloton Interactive has proven to be a disruptor in the fitness industry and has been a pioneer in the fitness content streaming space. The combination of its digital subscription business with its connected fitness products has made it a global leader in the health and fitness space.

Meanwhile, Planet Fitness is also exploring the opportunity to merge its bricks-and-mortar business with its digital app by combining its digital PF+ subscriptions with memberships to its gyms.

While Wall Street analysts are cautiously optimistic about both stocks, based on the upside potential over the next 12 months, PTON appears to be a better buy.

The post Peloton Interactive vs. Planet Fitness: Which Fitness Equipment Stock is a Better Buy? appeared first on TipRanks Financial Blog.

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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March 12, 2024

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com. 

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

Journal

The Lancet Global Health

Method of Research

Observational study

Subject of Research

People

Article Title

Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study

Article Publication Date

12-Mar-2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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