Analyst Amit Dayal of H.C. Wainwright maintained a Buy rating on Lsi Industries (LYTS – Research Report), retaining the price target of $20.00.
Amit Dayal has given his Buy rating due to a combination of factors, including the strategic acquisition of EMI Industries that significantly enhances LSI Industries’ presence in the food service market. This acquisition is key to LSI’s display solutions, expanding its capabilities within the grocery, convenience store, and restaurant sectors. It not only diversifies LSI’s portfolio but also aligns with the company’s ambitious goal to boost its sales by more than 60% from FY2023 to FY2028. Management has emphasized the role of mergers and acquisitions in achieving this target, and the EMI deal, being immediately accretive to earnings per share, is a step in that direction.
Furthermore, Dayal’s optimistic outlook is supported by projections of solid revenue growth and margin expansion for LSI Industries moving forward. Despite expecting a year-over-year decline in FY2024, the long-term forecast anticipates a substantial increase in revenues, with a compound annual growth rate (CAGR) of 8.0% by FY2033. Gross margins are also expected to improve, exceeding 29.0% in the following years. These financial indicators, along with a detailed discounted cash flow analysis using an 11.0% discount rate derived from LSI’s weighted average cost of capital (WACC), underpin the $20 price target and reinforce the Buy recommendation.
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Lsi Industries (LYTS) Company Description:
LSI Industries, Inc. engages in the provision a variety of lighting solutions. It operates through the following business segments: Lighting, Graphics, and Corporate and Eliminations. The Lighting segment manufactures and markets outdoor and indoor lighting for the commercial, industrial and multi-site retail markets, including the petroleum or convenience store market. The Graphics segment fabricates and sells exterior and interior visual image elements related to graphics. The Corporate and Eliminations segment includes the company’s administrative activities. The company was founded by Robert J. Ready, James P. Sferra, and Donald E. Whipple in 1976 and is headquartered in Cincinnati, OH.
