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Investing.com - Telsey Advisory Group has lowered its price target on Leslie’s (NASDAQ:LESL) to $0.75 from $1.25 while maintaining a Market Perform rating following the company’s negative pre-announcement of third-quarter fiscal 2025 earnings. The stock, currently trading at $0.64, has declined over 71% year-to-date, though it showed recent strength with a 26% gain in the past week. According to InvestingPro analysis, Leslie’s appears undervalued at current levels.
Leslie’s withdrew its fiscal year 2025 guidance after reporting worse-than-expected sales for the third quarter, according to Telsey. The pool supplies retailer cited unfavorably cold and wet weather that caused many customers to delay pool openings during the peak season. InvestingPro data reveals the company’s revenue has declined by 6.12% over the last twelve months, with 4 analysts recently revising their earnings estimates downward.
The company’s results were also likely pressured by a challenging macroeconomic environment, particularly in large-ticket discretionary categories, amid ongoing uncertainty related to tariffs and fiscal policies, Telsey noted.
Leslie’s reported approximately $43 million of cash on hand at the end of the third quarter and paid off a $20 million drawn revolver balance after the quarter ended, which the company believes provides ample liquidity to support its current plans. The company maintains a healthy current ratio of 1.56, indicating sufficient liquid assets to meet short-term obligations. Get access to 11 more key insights about Leslie’s financial health with an InvestingPro subscription.
Telsey’s revised price target reflects an EV/EBITDA multiple of approximately 9.5x applied to a reduced fiscal year 2026 adjusted EBITDA estimate of $91 million, down from a previous estimate of $131 million, as the firm sees "no clear sign of a return to positive sales growth in the near term." The company’s current EBITDA stands at $80.19 million, with an EV/EBITDA ratio of 15.06x.
In other recent news, Leslie’s, Inc. reported a 12% decline in net sales for the third quarter of fiscal 2025, with sales amounting to approximately $500 million. The company announced preliminary net income between $20 million and $22 million, and adjusted EBITDA is estimated to be between $79 million and $82 million. In a significant corporate development, Leslie’s appointed Amy College as the new Chief Merchandising and Supply Chain Officer, replacing Moyo LaBode. Analyst firm Mizuho (NYSE:MFG) has lowered its price target for Leslie’s to $1.00, citing continued margin pressures and top-line challenges, while maintaining a Neutral rating. S&P Global Ratings downgraded Leslie’s credit rating from ’B’ to ’B-’, highlighting weaker business prospects and sustained credit measure deterioration. Additionally, Stifel raised Leslie’s stock target to $0.57 but maintained a Hold rating, noting that the company’s recent earnings did not meet expectations. These developments reflect ongoing challenges and strategic changes within Leslie’s as it navigates a difficult market environment.
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