This Analyst Opts To Stay On The Sidelines Until Leslie's Return To Stable & Sustainable Growth

  • Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Leslie's Inc LESL and lowered the price target from $16 to $15.
  • Leslie's reported strong 4Q22 results and reiterated its long-term financial outlook, said the analyst.
  • The results highlighted progress on structural initiatives, including targeting of new customers, leveraging of loyalty members, expanding new products and services, opening new stores, enhancing water-testing, both in-store and home, focusing on Pro customers, and executing on M&A opportunities. 
  • Telsey said she is encouraged by solid early results of AccuBlue Home pilot, with planned expansion of AccBlue Home (version 2) in FY23 and beyond.
  • She believes the concept could be transformative for the company and the industry.
  • However, the analyst added, Leslie's FY23 outlook fell short of expectations, both sales and profits, primarily incorporating a tough macro environment.
  • She also said the return to normalization and lapping the difficult comparisons after three strong years—19.8% in FY20, 20.7% in FY21, and 16.3% in FY22, is pressuring the FY23 outlook.
  • Though many of the macro headwinds are transitory and are currently masking the progress on core structural initiatives, the analyst would choose to stay on the sidelines until she sees a return to stable and sustainable growth.
  • Price Action: LESL shares are trading lower by 1.75% at $14.35 on the last check Thursday.
  • Photo Via Wikimedia Commons
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