What happened Shares of Peloton Interactive (NASDAQ: PTON) were trading up by 5.1% as of 11:57 a.m. EDT Monday after the company received a bullish initiation from a Wall Street analyst. Loop Capital kicked off its coverage of the connected fitness company with a buy rating, and its analyst, Daniel Adam, assigned a price target of $140 to Peloton stock. So what Adam believes that the market's concerns regarding Peloton's recent recall of its Tread and Tread+ products are overblown. The consumer discretionary company has a strong history of beating earnings expectations and boosting guidance. Peloton shares are down by approximately 40% from their January peak, in part due to negative sentiment related to the recalls. Image source: Peloton. Investors aren't fully appreciating Peloton's pricing power, in Adam's view. The analyst suggests that the company could raise its subscription prices and drive incremental revenue growth from its existing user base. While Loop Capital does not believe that such a price increase is imminent, it suggests that "the opportunity to do so clearly exists." "Currently, both our estimates and consensus only contemplate sales of existing Peloton [connected fitness] products (i.e., the Bike and Bike+, Tread and Tread+)," the analyst wrote in a research note to investors. "However, given the company's history of launching new products, innovation could drive upside to our numbers and the Street's." Now what Loop Capital is looking forward to seeing what else Peloton has up its sleeve, pointing to the company's R&D budget of over $200 million. As the company continues to grow its subscriber base, Adam is optimistic that it can also expand its margins. 10 stocks we like better than Peloton InteractiveWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Peloton Interactive wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of May 11, 2021 Evan Niu, CFA owns shares of Peloton Interactive. The Motley Fool owns shares of and recommends Peloton Interactive. The Motley Fool has a disclosure policy.Source