Truist Remains Bullish On Lightspeed Commerce, Naming It An Acquisition Target; Credit Suisse Downgrades The Stock

  • Credit Suisse analyst Timothy Chiodo downgraded Lightspeed Commerce Inc LSPD from Outperform to Neutral and lowered the price target from $21 to $18.
  • Given a combination of macroeconomic factors, a still challenging path toward achieving the ~20% non-GAAP EBITDA margin target, ramping efforts from scaled competitors, and a less attractive LTV/CAC demonstrated thus far, the analyst no longer prefers the shares. 
  • The analyst awaits signs of success in the strategy pivot and abatement of macroeconomic pressures cited by management. 
  • While the headline location number was disappointing, Lightspeed's performance with more prominent locations was more encouraging but still slower than vs. growth cited last quarter. 
  • The analyst expects total locations to be challenged, given the combination of churn and lack of gross adds in this segment. 
  • However, the analyst expects minimal GTV impact given that these locations make up ~5% of total GTV, although Chiodo expects total revenue per unit of GTV to compress the mix toward more prominent merchants slightly. 
  • Truist Securities analyst Andrew Jeffrey maintained a Buy and raised the price target from $25 to $30.
  • Roughly in-line 3Q23 revenue speaks to a challenging retail backdrop and continued elevated small customer churn, partially offset by strong considerable customer growth and ongoing ARPU gains. 
  • While cross-currents eliminated revenue upside, the management's accurate financial forecasts, focused product development, enhanced sales efforts, and progress on crucial monetization drivers impressed the analyst. 
  • Jeffrey views Lightspeed as the leading software-enabled POS and payments provider to global complex merchants, given its large-retailer focus and early-stage payments monetization. 
  • Lightspeed's leverage to normalize global consumer spend is significantly greater than its peers. 
  • The analyst expected the FinTech industry to consolidate, making Lightspeed a potential acquisition target. 
  • Price Action: LSPD shares traded lower by 2.39% at $17.13 on the last check Friday.
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