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According to Loop Capital Markets, the current troubles of Peloton are overstated, and investors should buy the dip.
The recall weighed on the stock more than it should according to an analyst report issued on Monday by Daniel Adam.
“PTON shares are down 40% from their January highs, owing largely to the company’s voluntary recalls of the Tread and Tread+, as well as negative press surrounding the safety of those products. Although we fully expect the recalls to have an impact, we believe it will be short-lived and that management’s guidance likely bakes in an excessive amount of conservatism,” the note said.
The company also has plenty of room to grow revenue through price increases in the future, which should benefit Peloton in the long run, according to the note.
“While we do not expect PTON to raise prices anytime soon (we believe management will be methodical about any future price increases, similar to what NFLX has done with its streaming service), the opportunity to do so clearly exists,” the note stated.
Loop set a price target of $140 per share for Peloton, which is 36% higher than the stock’s closing price on Friday.
Investment company Piper Sandler thinks the commencement of U.S. vaccines would help Visa bridge the gap between its shares and rivals focusing on overseas markets.
Recovering more swiftly than certain other markets is expected to help make the U.S. economy the new global leader, according to Piper Sandler.
“Prior to the pandemic, Visa accounted for nearly half of its payment volume in the United States, compared to only 30% for Mastercard. We believe that higher vaccine rates in the United States should not only result in faster payments volume growth than in other regions but also in faster cross-border volume growth for corridors that include the United States,” the note stated.
Furthermore, with Canada’s vaccine success, cross-border travel from US cardholders may see a stronger recovery, while international markets may see a lag until vaccines are more widely available, according to Piper Sandler.
“We believe that regions with low vaccination rates may be hesitant to risk the introduction of new variants. According to the note, Visa generates only 39% of its volume from Asia, Europe, and Africa, compared to 60% for Mastercard.
The firm raised its price target on Visa from $234 to $260 per share. The new target is roughly 13% higher than the stock’s closing price on Friday.
As a result of the epidemic, Etsy is well-positioned to remain a top contender in the burgeoning e-commerce business, according to analysts at Atlantic Equities.
Analysts have noted that the strong connection between Etsy’s merchants and consumers makes it difficult to overtake the market leader.
“Through its strong brand and community-building, Etsy stands out from other digital pure-plays. Its selection of one-of-a-kind, handcrafted, personalized goods is another barrier to entry, and the community of sellers and buyers Etsy has already established would be difficult to replicate,” according to the note.
Despite its recent struggles, Atlantic believes the stock still has upside once the rotation is resolved.
“Given the company’s strong fundamentals and the accelerating category trends, we expect results to keep the stock appreciating in the medium and long term,” the note said.
The firm set a price target of $200 per share for Etsy, which is about 22% higher than the stock’s closing price on Friday.
The Market
Progressive and other insurance firms, like it, have had their stock prices drop because of the increase in auto travel in the US, as estimated by Morgan Stanley.
“After PGR’s high April core loss ratio, the consensus is factoring in [near-term] margin improvement vs. April. We disagree. People are driving again, at pre-Covid levels, which means there will be more accidents,” according to the note.
Morgan Stanley cut its estimated earnings per share for Progressive by 11 percent for 2021 and 16 percent for 2022, citing the costs from additional auto claims and catastrophe coverage.
“We see looming margin pressure that we believe the market is underestimating. People are driving again, at pre-Covid levels, which means there will be more accidents. At the same time, elevated car repair costs, which were less of an issue when roads were empty, will become more taxing on margins from here,” the note said.
The firm cut its price target on Progressive by $5 to $85 per share, which is 15 percent below where the stock closed on Friday.
