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Update: Morgan Stanley Downgrades Peloton Interactive to Underweight From Equalweight on Slumping Gross Adds, Trims Price Target to $4.50 From $5

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(Update include analyst commentary.)

Morgan Stanley downgraded Peloton Interactive (PTON) to underweight from equalweight, saying 'structural headwinds weigh on gross adds' resulting in a declining subscriber growth.

According to a note Tuesday, "growing interest in strength training and rising gym adoption are pressuring gross adds for PTON with its current product suite".

Analysts at the firm highlighted that Peloton's $50/month subscription fee is the company's main earnings source and with a declining subscriber base, profitability will take a hit.

The brokerage also decreased Peloton's price target to $4.50 from $5 on lower estimates.

Peloton Interactive has an average rating of overweight and mean price target of $7.90, according to analysts polled by FactSet.

Price: $5.14, Change: $-0.26, Percent Change: -4.81%

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