What Happened?

Shares of pool products retailer Leslie’s (NASDAQ: LESL) fell 2.7% in the afternoon session after Morgan Stanley significantly lowered its price target on the stock to $3.50 from $7. The investment bank, however, maintained its "Equalweight" rating on the shares. This substantial cut in the price expectation suggests a more cautious outlook on the company's future stock performance. Such a large reduction in a price target from a major financial firm often leads investors to reassess their own expectations, contributing to selling pressure on the stock.

The shares closed the day at $2.64, down 3.1% 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.

What Is The Market Telling Us

Leslie’s shares are extremely volatile and have had 87 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 2.3% on the news that the stock continued its recent downward trend amid what appeared to be technical selling pressure. The move extended a losing streak, as the shares had also fallen on the previous trading day. The stock had declined in six of the ten prior trading sessions, contributing to a significant drop over that period. According to market data, a technical sell signal was issued from a pivot point in the previous week, indicating further downward pressure until a new price floor was established.

Leslie's is down 94.1% since the beginning of the year, and at $2.67 per share, it is trading 94.6% below its 52-week high of $49.20 from December 2024. Investors who bought $1,000 worth of Leslie’s shares 5 years ago would now be looking at an investment worth $6.58.

The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave.