On Friday, Barclays (LON:BARC) analyst actions resulted in a change for Lightspeed POS (TSX:LSPD) Inc. (NYSE: NYSE:LSPD) stock. The firm downgraded the company's rating from Overweight to Equal Weight and adjusted the price target to $18.00 from the previous $20.00. The decision was influenced by a shift in the company's business dynamics and market challenges anticipated for the calendar year 2025.
Lightspeed, known for its Unified Payments and POS solutions, has seen healthy growth over the last year, with management successfully improving EBITDA margins since the fiscal year 2023. The company has maintained growth rates at or slightly above 20%, with payments penetration reaching approximately 37% of Gross Transaction (JO:TCPJ) Value (GTV). Despite these positive developments, there have been shifts within the company's revenue streams.
The software segment, traditionally a larger part of Lightspeed's business, has experienced a slowdown. This is attributed to sales representatives prioritizing payment solutions over software sales. Barclays anticipates that as Lightspeed enters the calendar year 2025, it may face near-term challenges. Growth is expected to decelerate into the teens, with payment penetration likely to slow and software growth remaining subdued in a competitive landscape.
The new price target of $18 is based on a multiple of 2x EV/CY26E Software (ETR:SOWGn) Sales and 2x EV/CY26E Transaction Based Revenue, which remains unchanged despite the downgrade. Barclays' assessment reflects a cautious outlook for Lightspeed's performance in the upcoming period, adjusting expectations in line with the predicted market conditions and internal business focus.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.