On Friday, TD (TSX:TD) Securities adjusted its stance on Lightspeed (TSX:LSPD) POS Inc. (NYSE:LSPD), downgrading the stock from Buy to Hold and reducing the price target to $17.50 from the previous $25.00. The firm's decision reflects concerns about the company's outlook for the fiscal year 2025, citing potential challenges in the coming year. Despite acceptable third-quarter fiscal 2024 results, the company's management has expressed caution regarding the overall macroeconomic environment and anticipates a slowdown in payment penetration as it begins to focus on international customers.
The analyst from TD Securities noted that Lightspeed's EBITDA margin might encounter obstacles in fiscal 2025 due to the expansion of its outbound sales team. This development could impact the company's profitability and operational efficiency. The revised rating and price target suggest a more conservative expectation of the company's stock performance moving forward.
The downgrade comes amid a strategic shift at Lightspeed, which the analyst believes no longer aligns with the initial investment thesis that supported a Buy rating. The company's change in direction, particularly in its sales strategy and international market targeting, appears to underlie the analyst's revised outlook.
Lightspeed POS Inc., which provides point-of-sale and e-commerce software to businesses, is now facing a period where its strategic decisions could significantly influence its financial performance and market position. The new price target of $17.50 represents a notable decrease from the previous target, indicating tempered confidence in the company's near-term growth prospects.
Investors and market watchers will likely monitor Lightspeed's performance closely, especially in terms of its international customer acquisition efforts and the effectiveness of its outbound sales team expansion. The company's ability to navigate the forecasted headwinds will be critical to its success in the upcoming fiscal year.
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