Musk threatens Apple with legal action over App Store bias towards OpenAI
On Friday, Stifel analysts upgraded Leslie’s (NASDAQ:LESL) stock rating to Hold from Sell, while also slashing the price target to $0.55 from the previous $1.30. The decision reflects a revised valuation of the company based on a 7X EV/FY26E EBITDA multiple, which indicates a significant discount compared to the 10.1X EV/FY26E EBITDA multiple of its retail peers. According to InvestingPro data, the company currently trades at an EV/EBITDA of 12.0x, with the stock down nearly 85% over the past year and showing significant price volatility.
The analysts at Stifel have adopted a cautious stance on Leslie’s financial outlook. They have adjusted the forecasted EBITDA for FY25 to $97 million, which now sits at the lower end of the company’s guidance. This aligns with current performance metrics from InvestingPro, showing LTM EBITDA of $96.18 million and revenue decline of 6.9%. Additionally, they do not anticipate comparable sales to return to growth until FY26. The projected EBITDA for FY27 is $117 million, which is 27% below the figures recorded in FY19. This points to a sluggish recovery and the impact of errors made during the COVID-19 era.
Despite the downgrade in price target and the cautious outlook, Stifel’s analysts suggest that the current risks and rewards balance out, leading to a neutral position on the stock. They believe that the significant decline from current levels would need to be driven by concerns over the company’s ongoing viability, as opposed to merely underperforming against expectations. The volatile nature of Leslie’s shares is expected to continue.
The analysts also noted that the depressed share price, coupled with Leslie’s leverage profile and limited investor interest, opens up various strategic possibilities. These could range from a substantial restructuring to narrow the company’s focus, to the potential of a takeover aimed at preserving value rather than achieving substantial growth.
In other recent news, Leslie’s Poolmart has experienced several significant developments impacting its financial standing and corporate structure. Moody’s Ratings downgraded Leslie’s Poolmart’s corporate family rating to Caa1 from B2, citing challenges in the consumer environment and high leverage levels. S&P Global Ratings also downgraded the company’s credit rating from ’B+’ to ’B’, noting an increase in leverage due to soft demand trends and transformational expenses. Despite these downgrades, Leslie’s has shown some positive signs, such as a slight increase in comparable store sales in the first quarter and ongoing strategic initiatives aimed at improving inventory management and customer service.
Additionally, Leslie’s shareholders approved amendments to the company’s Certificate of Incorporation and bylaws, allowing for the removal of directors without cause starting in 2027 and the exculpation of certain officers from liability. The company is also set to be removed from the S&P SmallCap 600 index due to a decrease in market capitalization, which could affect its stock visibility and liquidity. Telsey Advisory Group lowered its price target for Leslie’s shares to $3.00 from $3.75, maintaining a Market Perform rating after the company’s first-quarter fiscal 2025 results fell below expectations. These developments reflect Leslie’s ongoing efforts to navigate a challenging market environment while implementing strategic changes to bolster its business operations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.