Peloton slides following UBS downgrade

Yahoo Finance's Emily McCormick joins Kristin Myers to discuss how Peloton is sinking after UBS analysts downgraded the stock to neutral.

Video Transcript

KRISTIN MYERS: And Peloton getting a downgrade today from UBS. Yahoo Finance's Emily McCormick has more. Hey, Emily.

EMILY MCCORMICK: Hi, Kristin. We are seeing Peloton shares trading by just over 1% on the heels of this downgrade from UBS. And what the analysts had to say there is, quote, we believe the stock is fairly valued at these levels. Investors are already pricing in a high degree of expectations for forward subscriber and revenue growth and path toward profitability in the coming years. Now that new price target, $58, that was raised by $10 per share. But that still implies about 8% downside from yesterday's closing price for Peloton.

Now what UBS is really saying here it's not necessarily that Peloton is a bad stock. It definitely is one of the winners. That's really what consensus has seen with stay-at-home, with gyms really being closed out of [AUDIO OUT] spreads throughout the country. And UBS actually did raise their forward revenue estimates for both connected fitness products as well as subscription revenue.

They also said that their industry checks and data pointed to better-than-expected trends as COVID-19 stay-at-home measures continue to drive higher consumer adoption of at-home fitness. So again, really this downgrade is on valuation. Peloton's stock is up about 120% for the year to date. So obviously, much of that optimism already is priced into the stock, according to UBS. Kristin?

KRISTIN MYERS: All right, thanks so much, Emily McCormick.