Leslie’s stock price target lowered to $0.50 from $0.75 at Loop Capital

Investing.com - Loop Capital has lowered its price target on Leslie’s (NASDAQ:LESL) to $0.50 from $0.75 while maintaining a Hold rating on the stock. The company’s shares are currently trading at $0.36, near their 52-week low of $0.34. According to InvestingPro data, the stock has declined by 86.81% over the past year.

The firm cited weaker earnings results, challenging macroeconomic conditions, competitive pressures, and extremely high leverage as key factors behind the reduced outlook for the pool supplies retailer. InvestingPro analysis shows concerning metrics, with a total debt-to-capital ratio of 0.94 and negative earnings per share of -$0.25 in the last twelve months.

Loop Capital noted that despite these challenges, Leslie’s generates sufficient cash flow to cover interest payments and manage borrowings under its revolving credit facility, suggesting the company can sustain operations through the current difficult period.

The retailer has announced several initiatives to address its challenges, including same-day delivery partnerships with Uber (NYSE:UBER), new pool perks programs to strengthen customer relationships, leveraging local fulfillment centers to reduce inventory, and prioritizing never-out-of-stock items.

Loop Capital expects Leslie’s shares to "languish" until the business cycle improves, share loss and pricing stabilizes, and cash flow and earnings strengthen enough to provide a path toward reducing the company’s debt burden.

In other recent news, Leslie’s Inc. reported its Q2 2025 earnings, showing a significant shortfall in both earnings per share (EPS) and revenue when compared to analyst expectations. The company announced an EPS of $0.20, which was below the anticipated $0.35, and revenue of $500.35 million, missing the forecasted $564.81 million. These results were followed by a price target reduction from Jefferies, which adjusted its target to $0.35 from $0.65, maintaining a Hold rating. Jefferies highlighted challenges in Leslie’s fiscal third quarter and projected fiscal 2025 EBITDA margins at approximately 4.5%, down from previous highs.

Similarly, Telsey Advisory Group also lowered its price target for Leslie’s to $0.35 from $0.75, while retaining a Market Perform rating. Telsey’s adjustment came after Leslie’s pre-announced disappointing third-quarter fiscal 2025 results, which included a 12.4% decline in comparable sales and a roughly 25% year-over-year drop in adjusted EBITDA. These developments reflect ongoing challenges and weak demand facing the company.

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