Patent infringement ruling won’t disrupt Peloton claim analysts

Patent infringement ruling won’t disrupt Peloton (PTON) claim analysts


By Sam Boughedda

Reports emerged this week that imports of Peloton’s (NASDAQ:PTON) stationary bikes could be blocked after the U.S. International Trade Commission (ITC) ruled in Dish’s favor on a patent infringement suit.

The ITC said in regard to the clash over content-streaming technology that Dish Network Corporation (NASDAQ:DISH) proved there is a domestic industry to protect with three infringed patents.

However, BofA analysts said in a note Friday that the patent ruling “grabs some headlines,” but there is “no impact on users.”

“Peloton has plenty of bikes and treads available in inventory, so we don’t expect a disruption in sales. We think Peloton may appeal the ruling, but like Lululemon, we also see potential for Peloton to negotiate a modest licensing agreement with Dish to address the patent infringement,” wrote analysts, who have a Buy rating and $19 price target on Peloton. “Overall, we don’t anticipate a service or sales disruption, with negative headlines a modest negative for Peloton’s brand.”

Bernstein analysts, who have an Outperform rating and $13 per share price target on Peloton, said that “as a substantial portion of Peloton’s inventory is stored in the US, there should be no near-term impact to sales even if the ruling does take effect following the 60-day review.”

“Furthermore, DISH made a similar complaint against Lululemon over the same patent infringement issue (over LULU’s Mirror connected fitness device) and that dispute was recently settled in February 2023 – we expect to see a similar settlement from PTON, with no impact to service or sales but, depending on the size of the settlement, an impact to FCF for FY23 (ending June) or FY24,” said analysts.


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