Lightspeed gets price target raised to $30.00 at National Bank Financial

Following the company’s fourth quarter results, National Bank Financial analyst Richard Tse has raised his price target on Lightspeed POS (Lightspeed POS Stock Quote, Chart TSX:LSPD).

On Thursday, Lightspeed reported its Q4 and fiscal 2019 results. In the fourth quarter, the company posted an Adjusted EBITDA loss of $4.1-million on revenue of $21.3-million, a topline that was up 36 per cent over the same period last year.

“It’s been a great year for Lightspeed and for our customers,” CEO Dax Dasilva said. “Our revenue grew 36 per cent for the full fiscal year, and we completed our initial public offering. We also added two significant new products to our overall offering. We launched Lightspeed Loyalty to both our retail and restaurant clients in North America and Europe, and we made Lightspeed Payments generally available to our U.S. retail client base in late January. All of this creates momentum toward our main goal, which is to help complex SMBs thrive in a world with rapidly changing consumer expectations.”

Tse says Lightspeed is off to a good start as a pubco.

“Lightspeed kicked off its first quarter as a public company with a good start – particularly when it comes to the key metric of revenue with Q4 coming in ahead of expectations with 2020 guidance above expectations,” the analyst said. “If there was any knock, it would be that operating expenses were slightly higher than expectations care of scaling investments, particularly in the area of sales and marketing – not concerning to us in this growth phase. With respect to revenue, Lightspeed reported a 36% y/y increase with recurring revenue and payments up 34% y/y and full-year customer locations up 20% with a record number of new customers signed up in Q4. Perhaps more important for investors is Payments, which officially launched on January 30, 2019 to U.S. retail customers. Since that launch, Lightspeed has seen its attach rate in that base reach 40%, above the former payment partner attach rates of 35%. And if that weren’t enough, other modules like Loyalty also saw strong uptake with 1,500 customer locations signing up for this module (of a total base of 49k). All in, the growing base of customer locations and attach rates suggests accelerating growth by our estimates.”

In a research update to clients today, Tse maintained his “Outperform” rating and raised his one-year price target on the stock from $25.00 to $30.00, implying a return of 25 per cent at the time of publication.

Tse thinks LSPD will post EBITDA of negative $17.0-million on revenue of $108-million in fiscal 2020. He expects those numbers will improve to EBITDA of negative $5.0-million on a topline of $158-million the following year.