Q: Given Lightspeed’s announcement of a 10% staff reduction and up to 10% share buyback, a Scotia analyst suggests it’s a buy, stating Canadian tech is quite undervalued. LSPD has lagged the tech rebound, and I’m interested in your take. Is Lightspeed doing enough to regain investor confidence such that we might see a material increase in the share price?
5i Research Answer:
We think it is a step in the right direction. Certainly the cost-cutting and buyback may improve EPS, and it is expected to show a profit this year. But we would really like to see faster revenue growth, and staff cuts may impede this possibility. Keep in mind the CEO just changed in February, so this may be first steps in a recovery. We would not yet call this materially positive. We need to see some results here from these moves, and this could take at least a couple of quarters.