A recent deal by Peloton Interactive Inc. (NASDAQ:PTON) to acquire fitness equipment firm Precor in a deal that is expected to improve Peloton’s ability to pump out equipment and improve upon the supply chain issues which have hampered shares in the past.
Equipment sales have gone through the roof as a result of the coronavirus pandemic, with more people choosing to work out at home rather than at the gym, a trend that is likely to continue for some time. With online workouts and at-home workouts improving in terms of quality, affordability, and ease of use, more and more people have adopted the individual workout as opposed to the group workout as a way of staying fit in a very difficult time.
Analysts have cheered this announced acquisition, raising the price targets of Peloton across the board. This deal is widely viewed as one that should generate high levels of synergy, and result in a combined supply chain that is able to handle the increased volumes that have resulted from the pandemic.
For bullish investors on the fitness equipment sector, this move is indeed a good one. Anyone who has tried to purchase dumbbells or a bench online will know how strained the supply chains are for these companies right now. Consolidation in this sector is a good thing, and is likely to result in a combined entity with the ability to generate higher returns over the short, medium and long term.
This is a deal that makes sense, and is one I think investors interested in similar investments should take into consideration. At this point in time, Peloton is on the top of my watch list for this category.
Invest wisely, my friends.