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BMO Capital Markets adjusted its outlook on Lightspeed POS Inc. (NYSE: NYSE:LSPD), increasing the price target to $20.00 from the previous $18.00.
The firm maintains an Outperform rating on the company's shares. This revision comes in the wake of recent developments suggesting that Lightspeed may be exploring a sale.
Lightspeed, known for its cloud-based commerce platform, recently made headlines when a report surfaced about the company's potential plans to seek buyers.
Following this, Lightspeed confirmed that it is in the midst of a strategic review, but did not provide specifics regarding the nature of the alternatives under consideration.
The decision by BMO Capital to raise the price target is grounded in the belief that Lightspeed's shares could be significantly undervalued in the event of a buyout.
The analyst cites several factors contributing to this assessment, including the company's scale and size, its current low valuation, and the potential for increased earnings as it further develops its Payments segment.
The strategic review by Lightspeed is seen as a move to evaluate various options that could enhance shareholder value. The mention of potential interest from private equity firms in the Reuters article has put the spotlight on the company's next steps.
In other recent news, Lightspeed Commerce reported notable financial growth, with a 27% year-on-year increase in Q1 Fiscal 2025 revenue to $266.1 million, surpassing expectations. The company also saw a positive adjusted EBITDA of $10.2 million, a significant 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.
Analysts from BTIG and Barclays maintained positive ratings on the company, with BTIG seeing a 34% upside potential to their price target and Barclays noting the company's exploration of strategic options. Benchmark initiated coverage on Lightspeed with a Buy rating, while 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
As Lightspeed POS Inc. (NYSE: LSPD) undergoes strategic review with potential buyout talks on the horizon, real-time data from InvestingPro shows a company with a robust balance sheet and promising analyst sentiment. The company holds more cash than debt, providing financial flexibility that could be attractive to potential buyers. Additionally, 8 analysts have revised their earnings upwards for the upcoming period, signaling confidence in Lightspeed's future performance.
InvestingPro data highlights a significant 26.19% revenue growth over the last twelve months as of Q1 2023, with a gross profit margin of nearly 42%, underscoring the company's ability to generate earnings above its costs. Despite not being profitable over the last twelve months, analysts are predicting profitability this year, which could further fuel investor optimism. In terms of market activity, Lightspeed has experienced a strong return over the last month, with an 18.52% price total return, although the stock price movements have been quite volatile, which is a factor for investors to consider.
For investors seeking more detailed analysis and additional InvestingPro Tips, there are further insights available at https://www.investing.com/pro/LSPD, including metrics on Liquid assets, RSI indications, and the company's dividend policy.
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