On Thursday, Lightspeed POS Inc. (NYSE:LSPD) responded to a report about exploring strategic options, which includes a possible sale of the company. This announcement followed a significant increase in the company's stock, which closed 13% higher by the end of the trading day.
BTIG maintains a Buy rating on Lightspeed POS Inc., with a price target of $21.00. The firm's analyst pointed out that the company's stock trades at a peer-trailing 3.6x next twelve months (NTM) enterprise value to gross profit (EV/GP) ratio, even after the day's stock price increase. The analyst sees a 34% upside potential to their price target from the current levels.
The market reacted to the news reported earlier that day, which indicated Lightspeed was in talks with a financial advisor to consider various strategic directions, including the possibility of selling the business. The company later confirmed that it is indeed conducting a strategic review to fully realize its potential and is considering a range of strategic alternatives.
The analyst from BTIG expressed mixed views on whether Lightspeed will actually proceed with selling its business but highlighted that the news reports underscore the value seen in the company. The confirmation of the strategic review by Lightspeed adds credibility to the earlier report and could be a key factor in the stock's performance.
In other recent news, Lightspeed Commerce reported a significant 27% year-on-year increase in Q1 Fiscal 2025 revenue to $266.1 million, outperforming expectations. Additionally, the company saw a positive adjusted EBITDA of $10.2 million, a noteworthy improvement from a $7 million loss in the same period last year. On the strategic front, Barclays reiterated its Overweight rating for Lightspeed, noting the company's exploration of strategic options, including a potential sale.
Benchmark initiated coverage on Lightspeed with a Buy rating, while Piper Sandler maintained a Neutral rating on the stock, albeit reducing its price target from $17.00 to $15.00. These evaluations come amidst Lightspeed's successful focus on Unified Payments, which boosted its Gross Payment Volume penetration from 20% to 36%.
Recent developments also include Lightspeed's shift in strategy towards growing its subscription base, planning price increases, and implementing a renewed outbound sales strategy. The company's management remains optimistic that these initiatives will accelerate the subscription revenue growth rate to over 10%.
InvestingPro Insights
Following the recent developments surrounding Lightspeed POS Inc. (NYSE:LSPD), InvestingPro data offers a deeper perspective on the company's financial health and market performance. With a market capitalization of approximately $2.36 billion, Lightspeed's revenue growth has been robust, posting a 26.19% increase over the last twelve months as of Q1 2023. This growth is further reflected in the quarterly revenue growth of 27.26%. Despite the strong revenue figures, the company's profitability remains a challenge, as indicated by a negative P/E ratio of -15.9, which suggests the company has not turned a profit over the last twelve months.
InvestingPro Tips highlight a couple of key insights: Lightspeed holds more cash than debt on its balance sheet, which may provide financial stability and flexibility in strategic decision-making. Additionally, a significant number of analysts have revised their earnings upwards for the upcoming period, signaling potential optimism in the company's future performance. Notably, the stock has experienced a strong return over the last month, with an 18.52% price total return, which aligns with the recent surge in stock price following the strategic review announcement.
For investors seeking a comprehensive analysis, there are 9 additional InvestingPro Tips available, which could provide further guidance on Lightspeed's stock potential. These tips, along with real-time metrics, can be found on InvestingPro's dedicated page for Lightspeed: https://www.investing.com/pro/LSPD.
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