Jefferies raises Lightspeed POS target to $17 on growth outlook

On Thursday, Jefferies, a global investment banking firm, updated its outlook on Lightspeed POS Inc. (NYSE:LSPD), increasing the price target to $17.00 from the previous $14.50. The firm has maintained a Hold rating on the stock. The adjustment follows an assessment of the company's recent performance and future prospects.

Lightspeed POS (TSX:LSPD), which provides point-of-sale and e-commerce software to businesses, has shown signs of improvement. The company reported a gross profit beat, indicating better-than-expected profitability. Furthermore, the forecast for EBITDA (earnings before interest, taxes, depreciation, and amortization) has been raised, reflecting the positive impact of additional cost-saving measures implemented by the company.

Despite these positive developments, Lightspeed POS is still experiencing challenges with its Gross Transaction (JO:TCPJ) Volume (GTV) and location growth, which remain under pressure. However, the company's strategy to narrow its focus on core products for the North American retail and European hospitality markets is expected to help reinvigorate growth in the long term.

The analyst highlighted that the visibility into the acceleration of the company's software solutions in the second half of the fiscal year is encouraging. This progress is anticipated to set the stage for faster growth in fiscal year 2026. An Investor Day event, originally scheduled for mid-November, has been postponed due to an ongoing strategic review within the company. This review process is being closely watched by investors as it could lead to significant changes in the company's strategy and operations.

In other recent news, Lightspeed Commerce has been making significant financial strides. The company reported a 27% year-on-year increase in Q1 Fiscal 2025 revenue to $266.1 million, exceeding projections. Additionally, there was a positive adjusted EBITDA of $10.2 million, a marked improvement from a $7 million loss in the same period last year.

Amid these developments, Lightspeed confirmed that it is conducting a strategic review, considering a range of alternatives, including a potential sale. BMO Capital Markets, BTIG, and Barclays (LON:BARC) have maintained positive ratings on the company, while Benchmark initiated coverage with a Buy rating. However, Piper Sandler maintained a Neutral rating, albeit reducing its price target.

Lightspeed's recent focus on Unified Payments boosted its Gross Payment Volume penetration from 20% to 36%, and the company is now shifting its strategy towards growing its subscription base, planning price increases, and implementing a renewed outbound sales strategy.

InvestingPro Insights

To complement Jefferies' analysis, InvestingPro data provides additional context on Lightspeed POS Inc.'s financial health and market performance. The company's revenue growth remains strong, with a 26.19% increase in the last twelve months as of Q1 2023, and an even more impressive 27.26% quarterly growth in Q1 2023. This aligns with the analyst's positive outlook on the company's potential for accelerated growth.

InvestingPro Tips highlight that Lightspeed holds more cash than debt on its balance sheet, which could provide financial flexibility as the company implements its focused strategy on core products. Additionally, the stock has shown a strong return over the last three months, with InvestingPro data indicating a 31.55% price total return in that period. This recent performance may reflect growing investor confidence in Lightspeed's strategic direction.

It's worth noting that while analysts predict the company will be profitable this year, Lightspeed was not profitable over the last twelve months. This underscores the importance of the company's cost-saving measures and strategic review mentioned in the article.

For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Lightspeed POS Inc., providing deeper insights into the company's financial position and market dynamics.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.