Peloton Interactive Stock Volatile Ahead of Earnings

Our preview of the upcoming week's earnings reports includes Peloton Interactive (PTON), Salesforce (CRM) and Snowflake (SNOW).

Peloton logo on treadmill
(Image credit: Getty Images)

Peloton Interactive (PTON (opens in new tab), $12.66) takes the spotlight on this week's earnings calendar ahead of the Aug. 25 open. Analysts, on average, expect Peloton to report a per-share loss of 72 cents in its fiscal fourth quarter, slightly wider than the 71 cents per share it lost in the year-ago period. Revenue is forecast to fall 22.9% year-over-year (YoY) to $722.2 million.

Peloton was a pandemic superstar, as gym lockdowns ramped up demand for its at-home exercise equipment – and sent shares soaring from roughly $18 per share in March 2020 to north of $160 by December of that same year.

More recently, though, demand has stalled and PTON stock has suffered. Year-to-date, shares are off nearly 65%. And while PTON did jump more than 50% from late-July through mid-August, the selling has ramped up again ahead of earnings.

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Most analysts see a sharp rebound ahead for Peloton. S&P Global Market Intelligence pegs the average target price at $20.26, suggesting expected upside of 60% over the next 12 months or so.

Oppenheimer analyst Brian Nagel (Outperform) is one of those taking the glass-half-full approach to PTON stock.

"The past several quarters have proven tumultuous for Peloton and its shares, as the story has morphed rapidly from promising tech unicorn to COVID-19 winner, to post-pandemic victim," Nagel says. "Significant challenges for Peloton remain. That said, we believe that within the dynamic and fragmented health and wellness segment, there exists an opportunity for a better managed and more-disciplined PTON. Our positive call on PTON is longer term and highly speculative in nature."

Solid Q2 Revenue Growth Expected for Salesforce

When it comes to Dow Jones stocks, Salesforce (CRM (opens in new tab), $187.93) is near the bottom of the pack in terms of year-to-date performance, down more than 26%.

Investors are "wrestling with the potential for and magnitude of a slowdown in digital transformation projects and software budgets, as well as the pace of margin expansion that Salesforce can deliver over the near/mid-term," says Stifel analyst J. Parker Lane (Buy).

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Still, Lane says that recent partner checks point to some positives through the remainder of 2022 for the software-as-a-service (SaaS) firm, namely, "the cost and efficiency gains from cloud migration, the continued transformation of the workplace and customer engagement practices on the back end of COVID, and the potential for vendor consolidation."

However, the analyst cautions that these checks also indicate marketing budgets that are under pressure, which could hurt near-term spending on services.

Salesforce will report second-quarter earnings after Wednesday's close. Analysts, on average, are looking for a 21.5% year-over-year jump in revenue to $7.7 billion. Earnings are expected to arrive at $1.02 per share (-31% YoY).

Weak IT Spending Puts Snowflake Earnings at Risk

Snowflake (SNOW (opens in new tab), $161.75) will report its second-quarter results after the Aug. 24 close. Consensus estimates are for the cloud-based data platform to report a per-share loss of 1 cent, narrower than the 4 cents per share it lost in Q2 2021. Revenue is forecast at $467.2 million (+71.6% YoY).

Although SNOW is down more than 50% for the year-to-date, most analysts remain bullish. Of the 37 following the stock, 18 have it at Strong Buy, eight say it's a Buy, nine call it a Hold, one says Sell and one believes it's a Strong Sell. Bulls happen to be in good company, as Snowflake is a member of the Berkshire Hathaway equity portfolio.

However, UBS Global Research analyst Karl Keirstead recently downgraded Snowflake to Neutral (Hold) from Buy, citing "a backdrop of weakening IT budget growth and the risk that discretionary data analytics spend is cut back."

The analyst also said that the stock's significant rally off its June lows "makes for a less favorable set-up given the macro headwinds." SNOW gained nearly 43% from June 13 through Aug. 18.

Karee Venema
Contributing Editor, Kiplinger.com