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On Thursday, BTIG analyst Andrew Harte adjusted the price target for Lightspeed POS (TSX:LSPD) Inc. (NYSE:LSPD) shares, lowering it to $14 from the previous $17 while retaining a Buy rating on the stock. The adjustment follows Lightspeed’s Capital Markets Day, where the company shared its financial targets and growth strategies. Trading near its 52-week low of $9.88, InvestingPro analysis indicates the stock is currently undervalued, with multiple ProTips highlighting strong fundamentals including a healthy balance sheet with more cash than debt.
Harte expressed a cautiously optimistic stance, noting that Lightspeed’s gross profit compound annual growth rate (CAGR) target for fiscal year 2028 is slightly ahead of consensus expectations. The company has demonstrated strong revenue growth of 22.05% over the last twelve months, though he pointed out that fiscal year 2026 faces challenges due to macroeconomic factors. Consequently, the company’s financial outlook suggests an acceleration in growth for fiscal years 2027 and 2028, driven by an expansion of direct sales teams and additional product investments.
The analyst highlighted that Lightspeed’s gross margins, currently at 41.58%, are expected to improve by up to 300 basis points by fiscal year 2028, as the growth in subscription revenue is anticipated to surpass transaction revenue growth. Harte previously mentioned that Lightspeed needs to demonstrate its ability to increase locations over time. The company’s guidance implies that locations in core verticals, which currently account for approximately two-thirds of its customer base, will grow by 10% to 15% annually. For deeper insights into Lightspeed’s growth metrics and financial health, InvestingPro subscribers can access comprehensive analysis and 8 additional ProTips.
Harte commended the management’s presentation on strategies to accelerate customer growth. Nonetheless, he believes that investors will likely seek tangible evidence of this acceleration, especially considering the macroeconomic pressures facing Lightspeed’s customers. The company maintains a strong liquidity position with a current ratio of 6.1, providing financial flexibility during this growth phase. In light of the uncertainties in the upcoming year, Harte has revised the price target to $14. He concluded that despite the reduced price target, Lightspeed’s current valuation, when compared to its historical average and peers, offers an attractive risk/reward proposition for the stock.
In other recent news, Lightspeed Commerce Inc. has revised its fiscal 2025 revenue outlook, now expecting growth of approximately 18%, down from the previously anticipated 20%, due to macroeconomic challenges affecting transaction-based revenue. Despite these challenges, the company projects an adjusted EBITDA of over $53 million for the fiscal year. Additionally, Lightspeed has authorized a share buyback program totaling $430 million, reflecting confidence in its strategic direction. In analyst updates, Scotiabank (TSX:BNS) has adjusted Lightspeed’s price target from $19.00 to $17.00, maintaining a Sector Outperform rating, citing the impact of a challenging economic environment on the company’s performance.
In corporate governance news, Lightspeed announced the appointment of Manon Brouillette as Executive Chair of its Board of Directors, effective April 1, 2025. The company also recently secured a legal victory as a U.S. District Court dismissed a securities class action lawsuit against it, stating the claims lacked sufficient legal grounding. These developments come as Lightspeed prepares for its Capital Markets Day, where it plans to outline its three-year strategy and transformation journey. The company’s focus remains on profitable growth and cost management amid evolving economic conditions.
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