UBS Cuts Peloton Target to $10 on Rising Subscriber Churn

UBS lowered its price target on Peloton Interactive (NASDAQ:PTON) to $10.00 from $11.00 while maintaining a Buy rating, pointing to persistent subscriber churn that prompted a reduction in medium-term profitability estimates. The revision highlights ongoing challenges for the connected-fitness provider as major Wall Street firms divide on the company's turnaround trajectory.

"We lower our price target to $10 from $11 and lower our [fiscal year] 2027 EBITDA [estimate] to $491 million from $526 million, reflecting higher churn in the quarter beyond one-time impacts," wrote UBS analyst Arpine Kocharyan in a note covered by an Investing.com report.

Subscriber Churn Projections for 2027

The downward revision by UBS stems from detailed modeling of Peloton's customer base over the next several years. According to the Investing.com coverage, the Swiss bank projects that Peloton's total subscriber count could contract by 8% to 8.5% by fiscal year 2027.

This projection factors in approximately 310,000 gross subscriber additions against a monthly churn rate of roughly 1.7%. That monthly rate translates to an estimated 520,000 subscribers canceling their services over the course of the period, outpacing new hardware and digital acquisitions.

Balance Sheet Strength and Cash Reserves

Despite the headwinds in subscriber retention, Peloton maintains a liquidity buffer that underpins the remaining Buy rating from UBS. As of the latest reported quarter, the fitness equipment maker held net debt of $93 million alongside more than $1.2 billion in cash.

That cash pile accounts for more than half of the stock's current total market capitalization. This capital cushion provides management with financial flexibility to navigate ongoing customer acquisition slowdowns without immediate balance sheet distress.

Contrasting Wall Street Views

The cautious outlook from UBS contrasts with bearish moves from other major financial institutions. Morgan Stanley recently downgraded Peloton to Underweight from Equalweight, citing a sharp decline in customer acquisition.

According to the same analyst reporting, Morgan Stanley highlighted negative 9% year-over-year growth in connected fitness subscribers for fiscal year 2026, illustrating a deepening divide among market analysts regarding the company's ability to stabilize its core user base.