Lightspeed POS is disciplined and methodical, National Bank says

Calling it one to sock away, National Bank analyst Richard Tse says Lightspeed POS (Lightspeed POS Stock Quote, Chart TSX:LSPD) is in the early innings of a long run of success, thanks to the company’s large addressable market and rising execution momentum.

In a June 6 update to clients, Tse reiterated his “Outperform” rating and C$30.00 target, which at the time of publication represented a projected return of seven per cent.

Tse says he spent two days meeting investors with Lightspeed management, CEO Dax Dasilva and CFO Brandon Nussey, and he came away with continued confidence in LSPD.

“We gathered from our two days of meetings a view that the Company applies a disciplined process around capital deployment that’s paired with a methodical rollout/execution on a defined strategy. Yes, Lightspeed has had a spectacular run since it became public early this year with a return of 75 per cent (YTD), but we continue to see a long multi-year runway,” writes Tse.

The analyst thinks Lightspeed will generate fiscal 2020 revenue and EBITDA of $108 million and negative $17 million, respectively, and fiscal 2021 revenue and EBITDA of $158 million and negative $5 million, respectively. (All figures in US dollars unless noted otherwise.)

“We continue to believe Lightspeed is early in a rapidly growing POS. Our positive view revolves around the following key themes: 1) plays into a market that’s ripe for disruption; 2) large total addressable market (TAM) with a market share of less than one per cent today; 3) differentiated platform; 4) plan to drive sustained growth by applying a diligent customer acquisition process to land new customers and expand ARPU; and 5) acquisitions providing a step function in growth,” he says.