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On Wednesday, BofA Securities resumed coverage on Lightspeed POS (TSX:LSPD) Inc. (NYSE:LSPD), assigning a Buy rating to the company’s shares with a price target of $20.00. Currently trading at $13.72, with analyst targets ranging from $13.00 to $20.53, the stock has shown significant volatility in its price movements. The firm’s analyst highlighted the potential for profitable growth as the digital commerce platform vendor shifts its business strategy. According to InvestingPro, five analysts have recently revised their earnings estimates upward for the upcoming period.
Lightspeed has been the subject of investor attention since it announced on February 6, 2025, that it would remain a public company following the conclusion of its strategic review. The decision led to a significant drawdown in stock value, which BofA Securities now sees as an attractive risk/reward opportunity that investors shouldn’t overlook. The company maintains strong financial health with a current ratio of 6.1, and InvestingPro analysis indicates the stock is currently undervalued relative to its Fair Value.
The company is refocusing its efforts on generating adjusted EBITDA rather than merely expanding revenue, though it has maintained impressive revenue growth of 22% over the last twelve months. This move is expected to drive share gains in its core verticals of North American retail and EMEA hospitality. According to BofA Securities, Lightspeed has already been executing its new strategy for several months.
The price objective set by BofA Securities is based on a 24.2x CY26 enterprise value to CY26 EBITDA multiple, which is considered a discount compared to the 28.3x multiple of its front office peers. This valuation takes into account the execution risks associated with the business transformation that Lightspeed is currently undertaking.
Lightspeed’s strategic pivot towards profitability and adjusted EBITDA generation marks a significant transition for the company. The firm’s analysts believe that this renewed focus, coupled with the attractive entry point following the post-strategic review sell-off, positions Lightspeed for potential upside in the market.
In other recent news, Lightspeed Commerce Inc. has announced a strategic reorganization affecting approximately 200 employees, with savings redirected towards key growth areas. The move is part of the company’s broader optimization efforts, and is not expected to impact the ongoing review of strategic alternatives. RBC Capital has maintained its Outperform rating and $20.00 price target for Lightspeed POS Inc. amid these changes.
In another development, Lightspeed has authorized a share repurchase program worth $400 million, following a comprehensive strategic review. The company’s financial performance shows a positive trajectory, with total revenue reaching $280.1 million, a 17% increase year-over-year. Subscription revenue also saw a rise of 9% from the previous year.
Barclays (LON:BARC) has downgraded Lightspeed’s rating from Overweight to Equal Weight and adjusted the price target to $18.00 due to shifts in the company’s business dynamics and anticipated market challenges. Meanwhile, an RBC analyst has pointed out that the positive sentiment among American small and medium-sized businesses could lead to increased technology investments, benefiting companies like Lightspeed.
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