National Bank's view of the quarterHe was very impressed by it. So what's with the crummy price action in the stock? Better than expected first quarter results have National Bank Financial analyst Richard Tse raising his price target on Lightspeed POS (Lightspeed POS Stock Quote, Chart, News TSX:LSPD).
In a research update to clients Thursday, Tse maintained his “Outperform” rating on LSPD but raised his target from $45.00 to $50.00, which implied a return of 19.5 per cent at the time of publication.
“Lightspeed reported better-than-expected FQ1 results with revenue and adj. EBITDA well ahead of our and the consensus expectations,” the analyst said. “To us, those results and commentary around a robust rebound since April were a positive upside surprise considering the current health backdrop. Following initial softness in April, Lightspeed saw a rebound in both its retail and restaurant segments with GTV and merchant count well above our previous estimates.
Tse said LSPD is proving to be a resilient eCommerce player.
“In our opinion, for a Company that has a customer base that’s arguably in the crosshairs of disruption, the results corroborate Lightspeed’s differentiated (resilient) merchant base and the Company’s ability to quickly pivot under changing market conditions which underscore not only its ability to capture a large TAM but its operating prowess. In light of that, we believe Lightspeed is on a path to return to its pre-COVID trajectory – possibly even before the other side of the current pandemic. We reiterate our Outperform rating on LSPD with a revised DCF-based target price of $50 (from $45) given our model revisions.”
Tse thinks Lightspeed will post Adjusted EBITDA of negative $26.6-million on revenue of $157.4-million in fiscal 2021. He thinks those numbers will improve to EBITDA of negative $25.6-million on a topline of $198.2-million the following year.
On the quarterly results, the analyst said they were “way better than expected”.
“We were positively surprised by Lightspeed’s results in light of the market the Company operates in – brick and mortar merchants,” Tse said. “Lightspeed reported revenue of $36.2 mln (+51% Y/Y). Of that, recurring Software and Payment revenue was $33.4 mln with Hardware revenue of $2.8 mln. When we exclude contributions from acquisitions, our estimated organic growth for this quarter was approximately 30%. FQ1 Customer count of 77,000 came above our estimate of 74,000 as new customer additions (from large incumbents) more than offset what we believe to have been elevated churn rate given the backdrop. In addition, those positive operating results are also in the face of some customer subscriptions that were on pause (was 5% last quarter) but have since returned. In terms of total GTV, Lightspeed saw 17% Y/Y growth to over $5.4 bln, well above our estimated $3.7 bln driven by an unexpected rebound following the initial softness in April towards a 53% Y/Y increase in June. In terms of GTV by segment, Retail GTV rebounded on the back of strong performance by the bike, home and garden, sporting goods and golf with a 30% Y/Y growth in June while eCommerce posted a 100% Y/Y increase for FQ1.”
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