Lyft Competing In Lock-step With Uber Technologies: Analysts Eye 'Multiple Shots' On Goal For Growth

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Lyft, Inc. (NASDAQ: LYFT) released its FY27 targets, where the company said it anticipates a compound annual growth rate of around 15% in gross bookings from full-year 2024 to full-year 2027.

The company maintained its previously announced outlook for the second quarter and directional commentary for 2024.

Here's a glimpse into analysts' reactions to the company's quarterly performance:

  • RBC Capital Markets analyst Brad Erickson reiterated the Outperform rating on the stock, with the price forecast of $24.
Positively, the implied '27 guidance nicely exceeded Street for Bookings, EBITDA and FCF and in particular, the analyst notes.

Erickson particularly highlighted the insurance cost visibility, which should reduce the risk of a nearer-term EBITDA miss.

According to the analyst, LYFT is competing in lock-step with Uber Technologies, Inc. (NYSE: UBER) with multiple shots on goal for growth with improving driver supply, new products, new verticals and partnerships.

The analyst also underscored the firm's improving visibility on cost drivers, which is likely raising the odds of upward revisions to Street EBITDA estimates.

  • BofA Securities analyst Michael McGovern upgraded Lyft to Buy from Underperform, raising the price forecast to $20 from $15.
According to the analyst, Lyft can benefit more than the market from improving macro trends: travel/mobility tailwinds, West Coast/California mobility recovery still ramping, and the potential for lower rates to benefit SMID cap multiples.

Lyft could also see outsize multiple expansion given lower rates, the analyst adds.

The company's greater focus on fixed cost savings, share count, and Media growth makes a discounted valuation at 0.9x 2025E revenues an attractive entry point, McGovern adds.

  • Goldman Sachs analyst Eric Sheridan reiterated Neutral rating on the stock, with a price forecast of $21.
Per Sheridan, the potential for LYFT to sustainably drive a mid-teens compounded GB growth in North America (and any competitive read-across to UBER) may cause investor debates.

Lyft also talked about the importance of both growth and balance of the marketplace, driving optimizations & efficiency around price, ETAs and driver earnings, the analyst adds.

  • BMO Capital Markets analyst Brian J. Pitz reiterated Market Perform rating on Lyft, raising the price forecast to $19 from $18.
Structurally, Lyft grapples with insurance inflation and lost market share (mostly in 2022, but it has since stabilized), notes the analyst.

Pitz also sees a potential for changes in driver classification in Massachusetts, with a decision expected in summer 2024.

According to the analyst, the company's adjusted EBITDA margin of 4% by 2027 appears optimistic ahead of policy/ insurance changes.

However, while Lyft is an innovator, retail media network competition and fragmentation is rising and advertiser adoption could prove challenging, Pitz cautioned.

  • Piper Sandler analyst Thomas Champion reiterated the Overweight rating on Lyft, raising the price forecast to $24 from $23.
The analyst writes that new '27 EBITDA target of ~1 billion was handily above consensus.

Champion expects numbers to rise streetwide.

  • Needham analyst Bernie McTernan maintained the Hold rating on Lyft.
Per McTernan, LYFT Media is the lynchpin for hitting incremental margin targets while creating cost efficiencies to offset insurance cost growth. The major pushback heard from investors was the lack of formal buyback announcement and expected share count dilution, the analyst adds.

  • Wedbush analyst Scott Devitt reiterated the Neutral rating on the stock, raising the price forecast to $19 from $18.
The analyst expects gross bookings to increase at a 14% CAGR (2024-2027), slightly below management's guidance, and expects 2027 adjusted EBITDA margin to reach 3.8% of gross bookings (vs. guidance of 4.0%).

According to the analyst, the company's commentary is incrementally positive for Uber, as management outlined the attractive rideshare market opportunity that remains underpenetrated at less than 2% of personal vehicle trips in the U.S.

Price Action: LYFT shares are trading higher by 0.83% to $15.82 at last check Friday.