Apple Inc. (NASDAQ: AAPL) is reportedly planning to launch a bundled service for subscription by October that includes a fitness app subscription for the higher end.
Although Apple’s fitness app would compete with Peloton Interactive Inc’s (NASDAQ: PTON) digital-only subscription offer, it may have a limited impact on the company’s connected fitness base, according to BofA Securities.
The Peloton Analyst: Justin Post maintained a Buy rating on Peloton Interactive with an unchanged $72 price target.
The Peloton Thesis: Apple’s new fitness app will be available on the company’s devices, like the iPhone, iPad and Apple TV, while Peloton’s offerings are solutions for bikes and treadmills, Post said in a Friday note. (See his track record here.)
Peloton’s digital-only subscription revenue represented only 1% of total revenue in the third quarter, he said, adding that the biggest value in digital subscribers for the company is their potential conversion to connected fitness subscribers.
“Longer-term, it is unclear whether Apple would partner with other at-home fitness hardware companies, or create its own proprietary bike/tread, though we think former is more likely than the latter.”
Peloton’s bike delivery wait times suggest a robust order backlog, while BofA’s app download data indicates that guided workout app downloads grew 220% year-on-year in July and are up 6% sequentially.
PTON Price Action: Peloton shares were down 0.59% at $65.32 at last check Friday.
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Photo courtesy of Peloton.
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