Canaccord Genuity elevated its price target on LSI Industries (NASDAQ: LYTS) from $25 to $27 this past Friday, reaffirming a Buy rating on the stock. Currently priced at $23.25, LYTS remains close to its investing fair value, having appreciated 17.13% over the last week and nearing its 52-week peak of $25.50.
The firm’s analyst highlighted expectations for LSI’s continued strong development, attributing this to the company’s consistent record of organic growth and disciplined capital allocation strategies. This outlook is substantiated by LSI’s notable 13.15% revenue increase within the previous twelve-month period and an average yearly revenue growth rate of 13% over the last five years.
The updated $27 price target is derived by applying an approximate 20-times multiple to LSI’s projected fiscal 2027 adjusted earnings per share (EPS) estimate of $1.36, slightly higher than the previous estimate of $1.30. Presently, LSI trades with a price-to-earnings (P/E) ratio of 24.84 and a price/earnings-to-growth (PEG) ratio of 3.46, indicating a premium in terms of valuation relative to anticipated near-term earnings growth.
The 20-times multiple is roughly consistent with the median multiple of about 20 times calendar 2027 EPS observed among LSI Industries’ comparable peer group, according to the analyst note. The company’s diluted EPS currently stands at $0.82, with forecasts estimating $1.23 for fiscal 2026.
Canaccord Genuity also expressed confidence in LSI Industries’ management team, commending their cautious approach to mergers and acquisitions and anticipating ongoing shareholder value creation.
On the earnings front, LSI reported fiscal second-quarter revenue of $147 million, exceeding expectations of $145.96 million. However, the reported earnings per share of $0.26 came in just below the forecast of $0.27. Despite this marginal shortfall, the stock rose noticeably in pre-market trading, reflecting investor optimism regarding LSI’s prospects and strategic direction.
This quarterly performance reaffirms LSI’s capacity to generate significant revenue growth amid a competitive landscape, underpinning the company’s goal of sustaining momentum and stability in its operations.
Canaccord Genuity has raised its price target on LSI Industries to $27, reflecting confidence in the company’s sustained revenue growth and prudent capital management. Despite a slight earnings per share miss in its recent quarterly report, LSI’s top-line results exceeded expectations, signaling positive momentum in its operational execution. The stock trades near its fair value assessment, underpinned by a solid long-term growth trajectory and reasonable valuation multiples.
Key Points
- Canaccord Genuity raised the price target for LSI Industries to $27 while maintaining a Buy rating.
- LSI Industries reported strong revenue growth of 13.15% year-over-year and a five-year CAGR of 13%.
- The stock trades near its fair value with a P/E ratio of 24.84, reflecting premium valuation relative to earnings growth forecasts.
Risks
- Slightly missed EPS forecast in the recent quarter could indicate earnings volatility affecting investor confidence.
- Premium valuation metrics such as PEG ratio of 3.46 suggest potential sensitivity to changes in growth expectations.
- Dependence on management’s disciplined approach to M&A introduces execution risks impacting shareholder returns.