Lightspeed POS gets new $52.00 target at National Bank Financial

Following what he calls “solid” first quarter results, National Bank Financial analyst Richard Tse has raised his price target on Lightspeed POS (Lightspeed POS Stock Quote, Chart, News TSX:LSPD).

On Wednesday, Lightspeed reported its Q1, 2020 results. The company lost (USD) $9.09-million on revenue of $24.1-million, a topline that was up 38 per cent over the same period last year.

The company listed operational highlights, including an expansion of customer locations of more than 20 per cent to 51,000, the successful launch of Lightspeed Analytics, Lightspeed Loyalty, and Lightspeed Payments, and the acquisition of Swiss-based iKentoo which the company says puts it in a better place to accommodate large and complex deployments.

“This past quarter demonstrated solid execution on a number of our stated growth strategies to ensure Lightspeed continues our journey of building a recognized market leader for SMB retailers and restauranteurs globally,” CEO Dax Dasilva said. “Accelerated top-line growth of 38 per cent, continued GTV growth of greater than 30 per cent, and accelerating Payments adoption rates on eligible new customers in the quarter are all effective gauges of a healthy, growing customer base that is finding increased success through partnering with Lightspeed.”

Tse says quarter was a clear positive for the Montreal-based company.

“Lightspeed reported a solid Q1/F20 with revenue and EBITDA ahead of our and consensus expectations. More importantly, the outlook and conference call commentary support our investment thesis that calls for an acceleration in growth looking ahead. A big part of that expected acceleration comes from Lightspeed Payments which saw attach rates for eligible merchants rise from 40% to 50% since its initial rollout earlier this year; however, there’s increasing support for more underlying growth drivers as well which make this name increasingly more compelling for growth investors.”

Lightspeed POS gets another price target raise at National Bank Financial

In a research update to clients today, Tse maintained his “Outperform” rating on Lightspeed, but raised his one-year price target on the stock from $40.00 to $52.00, implying a return of 16 per cent at the time of publication.

Tse thinks LSPD will post EBITDA of (All figures USD) negative $20.0-million on revenue of $114.0-million in fiscal 2020. He expects those numbers will improve to EBITDA of negative $7.0-million on a topline of $170.0-million the following year.

The analyst says it is land grab time for Lightspeed.

“We do not believe the short-term forecasts capture that growing opportunity which is why we look ahead beyond F20 to capture a more normalized run rate in valuing this name,” Tse writes. “In Payments alone, we believe it will approach a contribution of just under $100 mln in revenue as we look ahead over the next two years from just under $8 mln this year. We’d refer you to our initiation of coverage report for a detailed analysis as to how we’ve forecast this name looking ahead. For now, the continued execution has us increasing our estimates while ascribing a (higher) implied valuation in light of growing momentum from incremental growth drivers.”

At press time, shares of Lightspeed POS on the Toronto Stock Exchange were up 8.9 per cent to $45.62