Leslie's is downgraded at Telsey with tough comparables, cost headwinds in the mix

Aug. 08, 2022 9:08 AM ETLeslie's, Inc. (LESL)By: Clark Schultz, SA News Editor

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Telsey Advisory Group dropped its rating on Leslie's (NASDAQ:LESL) to Market Perform from Outperform on its view that execution issues are piling up for the retailer.

Analyst Dana Telsey pointed to challenges for LESL in lapping tough comparisons from the last two years following a significant pull-forward in demand related to the pandemic and U.S. government stimulus. The price inflation on chemicals like chlorine is also seen as a profit headwind.

Telsey also said operational miscues including lack of preparation in the distribution network for fluctuating demand and persistent supply chain challenges factored into the cautious view on LESL.

"We are lowering our 12-month price Target by $12 to $16, which is based on applying an EV/EBITDA multiple of ~12x to our new adjusted FY23 EBITDA estimate of ~$321MM."

Shares of LESL fell 1.05% premarket to $15.04.

Dig into LESL's Q2 earnings call transcript.

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