Peloton can rally 12% as demand continues to surpass supply in early 2021, Bank of America says (PTON)

Getty Images, Ezra Shaw / Staff

• Peloton's strong growth throughout 2020 is set to continue and lift shares to new heights, Bank of America said Tuesday.
• The bank's analysts lifted their price target for the company to $175 to $150, implying a 12% rally from Tuesday's close over the next 12 months.
• The exercise-hardware manufacturer's deliveries were delayed by 10 weeks as of January 6, signaling demand still outstripped supply at the end of the holiday season.
• The company's product pipeline and a new factory should expand its addressable market and bolster supply throughout the year, the bank said.
• Watch Peloton trade live here.

The success story that was Peloton in 2020 isn't over yet, according to Bank of America.

Analysts Justin Post and Joanna Zhao lifted their price target for the fitness-equipment company to $175 from $150 on Tuesday, implying a 12% climb from Tuesday's close over the next 12 months. The bank maintains a "buy" rating on the shares.

Where the pandemic roiled most industries, stay-at-home orders propped up demand for Peloton's exercise hardware. Analysts boosted price targets throughout the year as order backlogs lengthened and shares kept climbing.

Delivery times have since softened, but Bank of America's analysts see enough unmet demand to boost Peloton's stock. Delivery delays for the company's Bike, Bike+, and Tread+ products rose to 10 weeks as of January 6, remaining elevated while down from the 12-week peak.

The holiday-season backlog should bolster sales into the next quarter, and a new factory expected to have come online last month should alleviate some delay pressures, the team said.

Read more: Morgan Stanley says to buy these 26 economically sensitive stocks poised to outperform as oil prices spike 10% by year-end

Peloton surged as much as 8.3% to an all-time high in Wednesday trading.

The company's future product lineup also played into the analysts' bullish outlook. The team expects Peloton to unveil a cheaper treadmill product in the March quarter before rolling out a certified pre-owned program in the summer. A new product category is also expected to be revealed by the end of the year. The wider array of hardware should help Peloton surpass difficult year-ago comparables in 2021, according to the team.

A hit to supply stands out as the biggest near-term risk for shares, they said, adding Gym reopenings and vaccine sentiments can also weigh on the stock over the next year.

Peloton traded at $156.04 as of 3:30 p.m. ET, up roughly 8% year-to-date. The company has 50 "buy" ratings, four "hold" ratings, and one "sell" rating from analysts.

Now read more markets coverage from Markets Insider and Business Insider:

A former journalist who worked his way up to become one of Wall Street's best tiny-company stock pickers tells us the 4 pillars of the approach that's beating 98% of his competitors

Affirm skyrockets 110% in first day of trading after $1.2 billion IPO

GameStop rips 93% higher as board-overhaul rally enters 3rd day

Markets Insider

NOW WATCH: What candy corn is actually made of

See Also:

• Bank of America says the warning signs that stocks are hurtling into bubble territory are growing — and pinpoints 6 that could signal a bear market is beginning
• BANK OF AMERICA: Buy these 8 US stocks poised to soar in the first quarter of 2021— and avoid these 2 at all costs
• A growth-fund manager who's beaten 96% of his peers over the past 5 years shares 6 stocks he sees 'dominating their space' for the next 5 to 10 years — including 2 he thinks could grow 100%