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Peloton Interactive Inc. (NASDAQ: PTON) is a stock that is far from controversy. Among the so-called unicorn valuations of 2019, those in excess of $1 billion come time for the initial public offering, Peloton debuted in September at $29 per share after raising $1.16 billion and with an initial market value of about $8 billion. The problem is that Peloton has been losing money hand over fist, and it initially fell on the day of its IPO and thereafter.

However, some on Wall Street are quite bullish on the stationary bike and subscription online spinning class model. After Peloton rose 4% on Tuesday, the company’s shares closed above their IPO price to $29.69. The consensus analyst target price was already $34.58, but Wedbush Securities has a new Outperform rating and a $37 target price.

Peloton has traded post-IPO as low as $20.46 a share, but it also has been as high as $37.02. The highest sell-side analyst target price for the stock is $45.

Wedbush’s James Hardiman sees Pelton benefiting from the fitness industry’s strong secular tailwinds, even though he also points out that there is an extremely fickle customer base. The other risk, probably without needing to be said, is a steady stream of fad exercise and health equipment, followed by gym concepts and a more recent trend in endless health and fitness apps. Hardiman has surveyed Peloton users and prospective customers and counted “our own experience with the product” to suggest that Peloton likely will not prove to be a fad. He sees the company as one of a small number of fitness companies that are likely to “be an enduring force going forward.”

Peloton had about 1.4 million customers when it came public, defined as individual users with a Peloton account. The company is deemed to have a first-mover advantage, as a compelling subset of the fitness market that offers consumers what they want and where and when they want it. Despite a considerable amount of work ahead of it, Hardiman sees Peloton as having the best shot of becoming synonymous with at-home fitness. Some recent problems pointed out were a tone-deaf holiday commercial and competitive interactive fitness products announced at the recent Consumer Electronics Show.

For specific subscriber numbers ahead, Hardiman sees it reaching as much as approximately 4 million. Some 3 million would be from the United States. While this may seem a difficult task, it is pointed out as just 2% of U.S. households and about 6% to 7% of the company’s total U.S. addressable market, or 20% to 25% of its U.S. serviceable addressable market. Hardiman also says that Peloton is only just beginning to scratch the surface of international markets that can significantly expand its total addressable markets.

The Wedbush report said:

The product of our subscription outlook and our lifetime value math (est. $1,200 cash value per new subscriber in today’s dollars) gets us to $27 per share of value for the subscription business, approaching the entirety of the current market price (~$28). One issue that is expected to expand its markets further is if incremental products are rolled out.

It also said:

Media speculation of a rowing machine and a cheaper treadmill are in-line with what we believe to be the most logical next steps for the company, and two products that are likely to be well received by the existing base. Both a theoretical rower and an elliptical from Peloton saw high-levels of potential interest among our survey respondents, while Peloton bike owners and non-owners alike expressed significantly more interest in a cheaper treadmill relative to the current $4,000 Tread.”

As for competition, NordicTrack’s Studio Cycle is the closest competitor, while the biggest threat is a yet-to-be-announced SoulCycle home offering that not only does not yet exist and has no known name, price or features. Hardiman further said:

With this in mind, while the Peloton product is an expensive one in isolation, we believe it is affordable relative to (1) a gym/fitness club membership that it is often replacing, and (2) seemingly cheaper but ultimately ineffectual fitness products and services, which make up the majority of fitness alternatives in the market. As such, Peloton is extremely well regarded by customers and prospective customers alike.