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On Monday, H.C. Wainwright reaffirmed its Buy rating and $30.00 price target for LSI Industries (NASDAQ:LYTS), a $425 million market cap company that InvestingPro analysis indicates is currently undervalued, following the company’s financial results for the third fiscal quarter of 2025, released on Sunday. The firm’s analyst, Amit Dayal, noted that LSI’s revenue reached $132.5 million, marking a year-over-year increase of 22.5% but a sequential decline of 10.3% from the previous quarter. The reported revenue was in line with H.C. Wainwright’s projection of $132.0 million.
LSI Industries experienced a shift in its gross margins, which were reported at 24.8% for the third fiscal quarter, an improvement from 23.6% in the second fiscal quarter but a decrease from 28.8% in the same quarter of the previous year. The company maintains strong financial health with a current ratio of 2.08, and notably has maintained dividend payments for 38 consecutive years, according to InvestingPro data. The analyst attributed the subdued gross margins to factors such as product mix, acquisition integration, and ramp-related costs, but anticipates an upward trend towards historical levels once these issues are resolved and the product mix is rebalanced.
The company’s operating expenses were slightly up, coming in at $26.6 million compared to $26.4 million in the preceding quarter. LSI’s net profit for the quarter stood at $3.9 million, or $0.13 per share, which was lower than the $5.4 million, or $0.18 per share, reported in the third fiscal quarter of the previous year.
At the close of the quarter, LSI Industries had a cash position of $4.3 million and a debt load of $55.4 million, maintaining what InvestingPro analysts characterize as a moderate debt level with a debt-to-equity ratio of 0.25. The analyst’s commentary underscored the reiteration of the Buy rating and the $30 price target, suggesting confidence in the company’s performance moving forward. For deeper insights into LSI Industries’ valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro alongside 6 additional ProTips and extensive financial metrics.
In other recent news, LSI Industries reported its financial results for Q3 FY2025, revealing a mixed performance. The company achieved revenue of $132.5 million, surpassing the forecast of $129.72 million, marking a 22% year-over-year growth. However, the earnings per share (EPS) of $0.20 fell short of the projected $0.24, missing the mark by 16.67%. This earnings miss came despite the strong performance of the Display Solutions segment, which grew by 70%, including 15% organic growth. The company also completed the acquisition of Canada’s Best Store Fixtures for $24 million, with a potential $7 million performance-based earnout. LSI Industries’ management emphasized ongoing product innovations and cross-selling opportunities as key drivers for expected continued sales growth in Q4. The company is also exploring mergers and acquisitions to enhance its market position. Analysts from Craig Hallum and H.C. Wainwright have inquired about tariff strategies and cross-selling opportunities, highlighting the company’s proactive approach to potential challenges.
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