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Peloton hits record, and chart indicates another 28% rally ahead

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Trading Nation: Peloton shares reach all-time highs after Cowen raises price target

Peloton keeps pedaling higher: Its shares were up 3.5% in Wednesday's premarket.

The exercise bike maker's stock has rallied more than 100% this quarter, benefiting from the stay-at-home and workout-from-home trend. Cowen upped its price target to a Street high of $70 on Tuesday, calling it a pioneer in the space.

Todd Gordon, managing director of Ascent Wealth Partners, agrees with Cowen that Peloton can continue its run.

"This company was a first mover. It succeeded in the online fitness and social communities, unlike the other ones [with] hardware offerings like GoPro and Fitbit that I don't think capitalized. They have a loyal customer base, high retention levels, and good margins from the subscription business," Gordon said on CNBC's "Trading Nation" on Tuesday.

Gordon adds that its chart supports the bullish fundamental picture.

"Following that breakout above $35, they're following a higher channel support, and I agree with Cowen — they don't face technical resistance until the $70s," he said.

A move to $70 implies 28% upside from Tuesday's close. It has already rallied 210% off March lows.

Gina Sanchez, CEO of Chantico Global, says Peloton is not without it challenges. She sees increased competition as one main reason for caution.

"It's not just facing competition from SoulCycle. It's is also facing competition from other bike makers like NordicTrack, Echelon, ProForm who are all forming their own studio offerings to help give a Peloton-like experience. They are a pioneer in this space but they're also opening up the space for a lot of competitors," Sanchez said during the same segment.

Customer commitment could also add to Peloton's challenges, she said.

"Most people who start a gym membership in January will abandon it by May. Most people who start a new fitness app or fitness tracker in January will abandon it by June. That is the churn that Peloton is going to be faced with for the rest of its life as a stock," she said.

Peloton in May raised its 2020 outlook for paid subscribers to a range of 1.04 million to 1.05 million users. 

Disclosure: Ascent Wealth Partner and CNBC parent Comcast-NBCUniversal are investors in Peloton.


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