Peloton Interactive's (PTON) connected fitness subscriber base faces continued pressure as consumers shift toward strength training and gyms, Morgan Stanley said in a Tuesday note.

The investment firm expects connected fitness subscribers to decline at a 6% compound annual rate from fiscal 2026 through fiscal 2029, compared with consensus expectations for roughly flat growth within three years.

The firm said the $50 monthly subscription is central to Peloton's earnings, making a declining subscriber base a pressure on profitability over time.

Morgan Stanley estimates Peloton's fiscal 2026 connected fitness gross adds of about 307,000 represented roughly half of churn, meaning the company would need to nearly double gross adds to achieve flat subscriber growth.

The growing interest in strength training and increased gym membership run counter to Peloton's at-home, cardio-first offering, according to the note.

Morgan Stanley downgraded Peloton to underweight from equal-weight, and lowered its price target to $4.50 from $5.00.

Shares of Peloton Interactive were 4.6% lower in Tuesday trading.

Price: 5.15, Change: -0.25, Percent Change: -4.61