Peloton Interactive (PTON) delivered stronger-than-expected fiscal Q4 results, but meaningful gains in valuation will likely depend on a clear turnaround in subscriber growth, UBS said in a note Thursday.

Analysts, including Arpine Kocharyan, said the company posted a fiscal Q4 beat, with slightly better subscriber numbers and lower churn than anticipated. Its guidance for fiscal year 2026 also came in well ahead of expectations.

The positive outlook on cash flow has caught investors' attention and significantly improved the stock's risk/reward profile, the note said.

However, the company would need to have a clear shift in subscriber growth to gain any meaningful increase in valuation. To achieve that, the analysts said Peloton has to show a healthier subscription trajectory, particularly outside of any churn increase caused by price hikes as we enter the key seasonal period.

Over the past three quarters, Peloton's churn has consistently beaten expectations, suggesting that its current strategy of focusing on serving existing customers more deeply is starting to pay off, the analysts said, adding that the company's fiscal 2026 guidance appears to assume churn levels higher than those seen in 2022, potentially leaving room for outperformance if churn trends continue to improve.

UBS also said stabilizing and growing subscribers will likely depend on several factors, including Peloton scaling its low-cost micro-store strategy to increase consumer access, launching new products and features this fall, reviving growth in its international business, and expanding its commercial offering through Precor.

UBS has a buy rating and a $11 price target on Peloton Interactive.

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