LSPD: Execution Risk Will Likely Cap Upside Despite Guidance Raise

Analysts have trimmed their price target on Lightspeed Commerce from approximately $18 to about $14 per share, citing slower projected revenue growth, slightly lower profit margins, and a more conservative earnings multiple, despite ongoing strategic progress.

Analyst Commentary

Bearish analysts highlight that the latest reset in expectations reflects lingering uncertainty around Lightspeed Commerce's ability to translate its strategic progress into consistent, high-quality earnings growth. While they acknowledge continued improvements in customer acquisition and product breadth, they argue that the near term remains a show-me story for both fundamentals and valuation.

Recent commentary points to a more guarded stance on the shares, with some on the Street opting to sit on the sidelines until there is clearer evidence that revenue growth can re-accelerate without sacrificing margins. The lowered price targets, now clustering in the low-teens range, signal a belief that the current valuation already discounts a fair amount of the medium-term recovery narrative.

Bearish Takeaways

• Bearish analysts view the reset price targets as a reflection of execution risk, arguing that management still needs to prove it can sustain growth while expanding margins in a more competitive environment.
• There is concern that multiple expansion will be limited until Lightspeed delivers several quarters of consistent performance, leaving the stock vulnerable to further derating if targets are missed.
• Slower projected revenue growth and only gradual profitability improvements are seen as constraints on upside, with some investors preferring to wait for stronger evidence of operating leverage.
• Bearish analysts also flag the risk that investor patience could wear thin if strategic initiatives take longer than expected to materially impact growth and earnings, which could cap near term share price appreciation.

What's in the News

• Lightspeed Commerce reached a court-approved settlement of a Québec class action alleging misrepresentation in public filings, agreeing to pay CAD 11 million with no admission of liability, with compensation to be distributed to class members who file claims by March 4, 2026 (Key Developments).
• The company raised its full-year fiscal 2026 revenue guidance, now expecting at least 12% year-over-year growth after outperformance in the first half of the year (Key Developments).
• For the third quarter of fiscal 2026, Lightspeed guided to revenue of approximately $309 million to $312 million, reinforcing expectations for continued double-digit top-line expansion (Key Developments).
• Lightspeed announced a broad suite of AI-driven product innovations across retail, hospitality, and golf, including an AI Showroom, a generative AI web builder, AI-generated product descriptions, and expanded integration and payments capabilities in markets such as Switzerland and Australia (Key Developments).

Valuation Changes

• Fair Value Estimate has fallen from approximately CA$17.94 to about CA$14.04 per share, implying a notably lower intrinsic value assessment.
• Discount Rate has risen slightly from 7.47% to about 7.49%, reflecting a marginally higher required return on equity.
• Revenue Growth has been revised down from around 11.03% to roughly 9.50% annually, indicating more conservative top line expectations.
• Net Profit Margin has edged down from about 11.65% to approximately 11.39%, signaling modestly lower anticipated profitability levels.
• Future P/E multiple has decreased from roughly 9.81x to about 7.98x, suggesting a more conservative valuation framework for forward earnings.