It is by now a familiar sight; A once high-flying tech stock beaten to a pulp. For example, since reaching new heights last September, in the space of 6 months, shares of Lightspeed Commerce (LSPD) have retreated by a depressing 75%.
While growth tech stocks in general have had a rough ride, considering the slide began following the release of a short-seller report, sentiment is obviously not all that around this name right now. The cold shoulder the stock received following the company’s latest quarterly results hasn’t helped either.
The thing is, not only did the results come in above Wall Street’s expectations, but the Canadian commerce platform provider also managed to offer an upbeat outlook, an element which has proved a stumbling block for many in recent times.
Assessing the print and the initial reaction, BTIG analyst Mark Palmer thinks the negative market reaction was based on two developments.
One regards the announcement of a new CEO. After 16 years at the helm, founder Dax Dasilva will transition to the newly created role of Executive Chair while President JP Chauvet has been promoted to take his place. Secondly, the analyst believes the company’s “modest improvement” in customer locations – and flat sequential increase – also played its part in the stock’s weakness.
However, Palmer thinks the gloomy reaction was “unwarranted” and believes the company’s future looks bright.
“The upshot, in our view, is that the prospects of LSPD’s effort to grow its platform facilitating commerce for small- and medium-sized retailers and restaurants, and to increase the penetration of payments across that platform, are significantly better than the stock’s valuation implies,” the 5-star analyst explained. “Moreover, we view LSPD’s management change as both benign and sensible, as under the new alignment it will continue to tap into Dasilva’s strategic thinking and his vision as the company’s founder while better leveraging Chauvet’s operational expertise.”
As such, despite some near-term headwinds, and given the company’s F3Q22 report offered “ample reason to believe that its growth potential remains intact,” Palmer believes buying the stock at the current valuation makes it “an attractive proposition.”
Accordingly, the analyst reiterated a Buy rating on LSPD shares and kept the price target at $60, which suggests room for ~98% growth over the coming months. (To watch Palmer’s track record, click here)
While the Street’s average target is more modest, at $53.04, the figure still presents one-year upside of a handsome 75%. Looking at the consensus breakdown, the bulls come in ahead, with 10 Buys compared to 2 Holds and 1 Sell. (See Lightspeed stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
