This Stock Is 96% Off of Its All-Time High, But 1 Wall Street Analyst Thinks It Can Gain 236% This Year

The S&P 500 continues to rise, and more investors are buying into the idea of buying the market. Exchange-traded funds (ETFs) that track the S&P 500, in addition to other indexes, have become incredibly popular over the past few years as the market soars; it's up 71% over the past three years.

But growth investors still seek out those rare opportunities that help them beat the market. As long as you do your due diligence and spread your risk, a growth-focused strategy could yield fantastic results for the right investor.

Can Peloton Interactive (NASDAQ: PTON) be that stock? It's down 96% from its all-time high, but the consensus on Wall Street is a price 70% higher than today's over the next 12 to 18 months, and one analyst sees it gaining 236%. Should you invest in Peloton's turnaround story?

Image source: Peloton.

Problems at Peloton

Interest in Peloton products has waned over the past few years, and the company is still downsizing to meet changing demand. While that has resulted in some important progress on cost efficiency, it doesn't change the low demand, and revenue continues to decline.

The company has gone through several CEOs over the past few years, and today it is led by Peter Stern, who is a year into the job. He has introduced a frenzy of changes in the company covering the gamut of activities to boost engagement and revenue, and he has an expansive plan to get moving again as it keeps cutting costs.

There are four overarching elements of turning the company around: providing member value, attracting new members, keeping members engaged, and achieving operational excellence. Each one of these components comes with a large array of goals and ideals, and management envisions becoming a growth enterprise as it puts this all together.

The main theme of the company's turnaround ambitions is leaning into health and wellness. It sees big opportunities in this space as the types of people who are most likely to be interested in Peloton products have a general interest in premium health and wellness. Its connected fitness devices are its own starting point, and one phrase Stern has repeatedly used as Peloton's mantra refers to its "premium hardware, intuitive software, world-class instructors, and a deeply engaged community."

How's the plan panning out?

There have been some important wins for Peloton over the past few months, including two consecutive quarters of positive net income and $67 million in free cash flow in the 2026 fiscal first quarter (ended Sept. 30).

The company is leaning hard into artificial intelligence (AI), with new voice capabilities to set preferences mid-workout and Sonos speakers, as well as Peloton IQ, which offers personalized workout guidance and data-driven insights for each individual user. It also recently launched a cross-training series, and since introducing it into Peloton IQ, the company has seen more interest in its premium products.

There's a lot more going on, including new boutique stores, new commercial equipment, and a store expansion in Australia, as well as the acquisition of Breathwork, a wellness app that focuses on breathing.

However, so far, revenue is still on the decline, down 6% year over year in the first quarter. Members and paid connected fitness subscriptions were also down 6%, and paid app subscriptions were down 8%.

Wall Street sees the light at the end of the tunnel

As Peloton makes progress, Wall Street sees the potential for a turnaround. The company is guiding for revenue to remain flat year over year in the second quarter, although it's still guiding for a full-year decrease of 2%. It continues to make efforts to cut costs, reducing global headcount and taking other actions to meet its goal of $100 million in run-rate cost savings.

Peloton stock trades at a cheap price-to-sales ratio of under 1, which is why there's room to gain if the company delivers solid progress this year. However, as per its forecast, it still hasn't reached rock bottom.

Although the average Wall Street consensus price is a 70% gain, the ratings are mixed, with about half in the buy camp and half in the sell camp. Peloton could be a huge turnaround story, but it's only for the most risk-tolerant investors today, and most investors should sit this one out for now.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Peloton Interactive and Sonos. The Motley Fool has a disclosure policy.