Leslie’s Financial Struggles: Sell Rating Due to Revenue Shortfall and Market Share Challenges

In a report released on May 9, Shaun Calnan from Bank of America Securities reiterated a Sell rating on Leslie’s (LESL – Research Report), with a price target of $0.65.

Shaun Calnan has given his Sell rating due to a combination of factors impacting Leslie’s financial performance and market position. Despite Leslie’s adjusted EBITDA aligning with expectations, the company experienced a revenue shortfall, which was attributed to adverse weather conditions affecting sales. This revenue miss, coupled with a significant decline in same-store sales, particularly in residential sales, indicates ongoing challenges in maintaining market share.
Furthermore, while Leslie’s management has implemented cost-saving measures and transformation initiatives, these efforts may not be sufficient to counteract the muted free cash flow generation and the company’s limited ability to reduce debt. The unchanged guidance for fiscal 2025 suggests that any improvement in revenue and EBITDA may be difficult to achieve if the company continues to lose market share. As a result, Calnan maintains a cautious outlook, reiterating an Underperform rating and setting a price objective below the current market price.