LESL: Compressed Multiple And Reverse Split Will Set Stage For Upside

Analysts have cut their price target on Leslie's sharply, from about $16.53 to roughly $1.00. They cited recalibrated valuation multiples, softer revenue growth expectations, and a more cautious view of competitive and macro headwinds, despite improved margin assumptions and a lower anticipated future P/E.

Analyst Commentary

Bullish analysts acknowledge the dramatic reset in price targets but emphasize that current valuations already discount a considerable amount of execution and macro risk. They argue that the recent repricing, particularly following the reverse stock split, better aligns Leslie's equity value with its near term earnings power and provides a cleaner base for future upside if fundamentals stabilize.

The recalibration of models has largely centered on normalizing growth expectations and trimming valuation multiples, rather than signaling a collapse in the underlying earnings profile. Some see this as creating a more realistic hurdle rate for management, where modest improvements in traffic, mix, or cost control could drive meaningful equity returns off a compressed base.

Following the reverse stock split, bullish analysts suggest the new share price framework may improve market perception and liquidity over time. This could help the company re engage a broader institutional investor base. They view the simplified capital structure and higher absolute share price as potential catalysts for greater attention once operational trends begin to inflect.

Even with cautious tones around competition and macro conditions, pockets of the Street still point to Leslie's brand recognition, installed customer base, and specialty category exposure as structural advantages that can support medium term growth. In their view, if management can demonstrate consistent execution against guidance, the current multiple could prove overly punitive.

Bullish Takeaways

• Bullish analysts see the post split price targets as establishing a more conservative, achievable baseline. This could allow even modest revenue and margin outperformance to translate into outsized share price appreciation.
• The reset in valuation multiples is viewed as de risking the story, with some arguing that the stock now trades at a discount to its long term growth potential and normalized free cash flow generation.
• Several bullish views emphasize that comps and EBITDA margin assumptions have not deteriorated meaningfully in recent revisions. This suggests underlying earnings power remains intact if demand stabilizes.
• With expectations and targets lowered, bullish analysts believe execution catalysts such as improved inventory management, disciplined promotions, and share stabilization could drive a rerating from currently depressed levels.

What's in the News

• Recorded fourth quarter 2025 goodwill impairment charges of $180.7 million, signaling a significant reset of balance sheet asset values (Key Developments)
• Issued fiscal 2026 sales guidance of $1.1 billion to $1.25 billion, with the majority of revenue and earnings still expected in the seasonally strong second half (Key Developments)
• Implemented a 1 for 20 reverse stock split and proportionate reduction in authorized shares effective September 26, 2025, with trading on a split adjusted basis on Nasdaq beginning September 29, 2025 (Key Developments)
• Announced the appointment of Jeff White as chief financial officer effective October 5, 2025, adding experienced financial and operational leadership across FP&A, investor relations, and capital structure management (Key Developments)

Valuation Changes

• Fair Value: Reduced sharply from about $16.53 per share to roughly $1.00. This implies a significant reassessment of the company’s long term earnings power.
• Discount Rate: Increased slightly from approximately 12.32 percent to 12.50 percent, which modestly raises the required return applied to future cash flows.
• Revenue Growth: Shifted from a prior expectation of roughly 4.09 percent annual growth to a slightly negative outlook near 0.25 percent contraction. This reflects softer top line assumptions.
• Profit Margin: Raised meaningfully from around 0.37 percent to approximately 4.88 percent, indicating improved expectations for operational efficiency and profitability.
• Future P/E: Cut dramatically from about 50.7x to roughly 3.5x. This signals a substantial compression in the multiple investors are assumed willing to pay for forward earnings.