What Happened?
Shares of pool products retailer Leslie’s (NASDAQ: LESL) fell 4.6% in the afternoon session after traders reacted to a series of cautious analyst notes, including a steep price target reduction from Mizuho.
The investment bank Mizuho slashed its price objective on Leslie's stock from $3.00 down to just $1.00, though it kept a “neutral” rating. Adding to the pile of sober assessments, Telsey Advisory Group reiterated its “market perform” rating on the shares.
The shares closed the day at $0.27, down 3.6% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Leslie's? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Leslie’s shares are extremely volatile and have had 83 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 15.6% on the news that the company announced in a regulatory filing that its board of directors approved a 1-for-20 reverse stock split.
A reverse stock split consolidates a company's existing shares into fewer, higher-priced shares. While the move doesn't alter the company's overall market value, it is often viewed negatively by investors. Such actions can be interpreted as a sign that management lacks confidence in the company's ability to increase its share price through operational performance. The market's reaction suggests investors are concerned about the company's underlying health, prompting a significant sell-off following the news.
Leslie's is down 87.6% since the beginning of the year, and at $0.28 per share, it is trading 92% below its 52-week high of $3.51 from November 2024. Investors who bought $1,000 worth of Leslie’s shares at the IPO in October 2020 would now be looking at an investment worth $12.94.
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