On Friday, BofA Securities adjusted its outlook on Lightspeed POS Inc. (NYSE:LSPD), increasing the price target to $20.00 from the previous $19.00 while retaining a Neutral rating on the stock.
The firm's decision came after Lightspeed reported favorable fourth-quarter results for the fiscal year 2024, with revenue reaching $230 million, surpassing the Street's expectation of $225 million. Furthermore, the company's adjusted EBITDA came in at $4.4 million, higher than the Street's projection of $3.5 million.
For the fiscal year 2025, Lightspeed has set a revenue growth target of over 20%, which is in line with the Street's forecast of 22.5%. Notably, the company's guidance for adjusted EBITDA stands at $40.0 million, significantly exceeding the Street's view of $23 million.
This guidance reflects Lightspeed's efforts to maintain disciplined growth and its strategy to reaccelerate subscription growth following a period of substantial changes, including a reduction in workforce and a CEO transition.
The analyst at BofA Securities noted that while Lightspeed has experienced various challenges in the past few years, it is entering the fiscal year 2025 with a clear focus on disciplined growth.
The company's strategy to boost subscription growth is seen as the key driver for its future performance. However, the analyst indicated that it may take some time for the results of this strategy to become evident.
In conclusion, BofA Securities reiterated its Neutral stance on Lightspeed POS Inc., reflecting a cautious optimism about the company's ability to execute its growth strategy moving forward. The raised price objective to $20.00 is indicative of the firm's recognition of Lightspeed's solid fourth-quarter performance and its positive outlook for the upcoming fiscal year.
InvestingPro Insights
As Lightspeed POS Inc. (NYSE:LSPD) focuses on disciplined growth and a strategy aimed at reaccelerating subscription growth, recent metrics from InvestingPro provide additional context to BofA Securities' updated outlook. Lightspeed's stock has shown significant return over the last week with a 14.92% price total return, and an even stronger return over the last month at 15.27%, indicating a positive short-term investor sentiment. This momentum may be a reflection of the company's recent moves and the market's response to its strategic adjustments.
InvestingPro data highlights the company's revenue growth, which at 24.6% for the last twelve months as of Q3 2024, outpaces the Street's expectations. The company's gross profit margin stands at a healthy 43.15%, suggesting that Lightspeed is maintaining profitability at the core operational level, despite not being profitable over the last twelve months. Additionally, with a market cap of $2.32 billion, Lightspeed is positioned as a substantial player in the point-of-sale industry.
InvestingPro Tips also note that Lightspeed holds more cash than debt on its balance sheet and that liquid assets exceed short term obligations, providing the company with a solid foundation to support its growth initiatives. Analysts predict that the company will be profitable this year, aligning with Lightspeed's own revenue growth targets.
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