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Lightspeed POS Inc. (TSE:LSPD) Just Reported And Analysts Have Been Lifting Their Price Targets

Simply Wall St
·4 min read

The investors in Lightspeed POS Inc.'s (TSE:LSPD) will be rubbing their hands together with glee today, after the share price leapt 21% to CA$51.53 in the week following its quarterly results. Lightspeed POS beat revenue forecasts by a solid 15%, hitting US$45m, but it also saw a corresponding increase in statutory losses, which hit US$0.20, some -18% greater than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Lightspeed POS

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Lightspeed POS' 14 analysts is for revenues of US$178.8m in 2021, which would reflect a notable 19% increase on its sales over the past 12 months. Losses are expected to increase slightly, to US$0.78 per share. Before this earnings announcement, the analysts had been modelling revenues of US$166.0m and losses of US$0.70 per share in 2021. While this year's revenue estimates increased, there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

It will come as a surprise to learn that the consensus price target rose 13% to US$40.18, with the analysts clearly more interested in growing revenue, even as losses intensify. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Lightspeed POS, with the most bullish analyst valuing it at US$69.95 and the most bearish at US$27.98 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Lightspeed POS' revenue growth will slow down substantially, with revenues next year expected to grow 19%, compared to a historical growth rate of 61% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 16% next year. So it's pretty clear that, while Lightspeed POS' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lightspeed POS analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that Lightspeed POS is showing 3 warning signs in our investment analysis , you should know about...

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.