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Tuesday, Lightspeed POS (TSX:LSPD) Inc. (NYSE:LSPD) experienced a revision in its financial outlook as Scotiabank (TSX:BNS) analyst Paul Steep adjusted the company’s price target to $17.00, down from the previous $19.00, while maintaining a Sector Outperform rating. Currently trading at $9.98, near its 52-week low of $9.90, the stock has declined over 34% year-to-date. The adjustment comes in response to a challenging macroeconomic environment that has impacted Lightspeed’s performance, particularly in February and March. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations.
Steep noted that weaker-than-expected results have prompted Lightspeed to revise its revenue growth forecast for the fiscal year 2025 (FY25) to approximately 18%, down from the earlier estimate of around 20%. The most significant impact is expected within the company’s transaction-based business, such as Payments, due to softer same-store sales (SSS) trends. InvestingPro data shows the company maintains strong financial health with a current ratio of 6.1 and more cash than debt on its balance sheet.
Despite these challenges, Lightspeed remains committed to achieving profitability, with expectations to reach an adjusted EBITDA of over $53 million for FY25. Scotiabank’s revised model takes into account more conservative assumptions regarding new location additions and SSS trends for the fourth quarter, with anticipated revenue growth now at 9.7%, a drop from the previously forecasted 16.6%.
The reduction in the price target also reflects a lowered valuation multiple, now set at 3.0 times the calendar year 2026 enterprise value to gross profit (EV/GP), as opposed to the former 3.5 multiple. This adjustment is attributed to softer gross transaction volume (GTV) trends for Lightspeed compared to its peers.
Investors and analysts are looking ahead to Lightspeed’s Capital Markets Day this Wednesday for further updates on the company’s three-year strategic plan and how it aims to navigate the current economic landscape.
In other recent news, Lightspeed Commerce Inc. has revised its fiscal 2025 revenue outlook, now anticipating an 18% growth, down from the previously expected 20%. This adjustment is attributed to macroeconomic challenges such as inflation and weakened consumer confidence, impacting transaction-based revenue. Additionally, Lightspeed has reported total revenue of $280.1 million, marking a 17% year-over-year increase, alongside a positive Adjusted EBITDA of $16.6 million, which exceeded their forecast of approximately $14 million. In another development, BofA Securities has upgraded Lightspeed’s stock to a Buy rating with a $20 price target, highlighting the company’s strategic shift towards profitability and adjusted EBITDA generation. Further, Lightspeed has authorized a $400 million share repurchase program, reflecting confidence in its future prospects and ongoing transformation strategy. The company also announced the appointment of Manon Brouillette as Executive Chair of the Board, effective April 1, 2025. In legal news, Lightspeed secured a victory as a U.S. court dismissed a securities class action lawsuit against it, citing insufficient legal grounds. These developments come as Lightspeed prepares for its Capital Markets Day at the New York Stock Exchange, where it will discuss its transformation plan and long-term financial outlook.
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