On Thursday, Barclays (LON:BARC) updated its stance on Lyft Inc (NASDAQ:LYFT), raising the company's price target from $14.00 to $20.00. The firm maintained its Equal-weight rating on the stock.
The adjustment follows Lyft's recent financial performance, which showed revenues and earnings before interest, taxes, depreciation, and amortization (EBITDA) surpassing consensus estimates by 1% and 14%, respectively. The company also provided guidance that exceeded expectations.
Lyft's steady growth in rides and gross bookings (GBs) during the third and fourth quarters was highlighted as a positive sign, especially in contrast to its competitor Uber (NYSE:UBER), which is experiencing a deceleration. Despite this, autonomous vehicles (AV) continue to present an uncertain factor for the industry, although it is still considered early days for this technology's impact on the market.
Barclays noted that Lyft's valuation is approximately half that of its leading gig economy peers when measured at 11 times its estimated 2025 EBITDA. This valuation gap suggests that if Lyft can maintain its current trajectory of execution, there may be potential for the company's shares to continue to appreciate.
The analyst's commentary pointed out that Lyft's performance was generally in line with the expectations set during its Investor Day. The company's consistency in growth and margin progression seems to be gradually gaining recognition, as evidenced by the updated price target.
In summary, Barclays sees Lyft as a company that could potentially see further upside in its share value, provided it continues to perform and navigate the challenges within its industry, including the evolving autonomous vehicle space.
In other recent news, Lyft's third-quarter earnings report showed both gross bookings and revenue surpassing market expectations, leading Goldman Sachs to raise its price target for the company to $20. Lyft has also announced strategic partnerships with DoorDash (NASDAQ:DASH), Mobileye, May Mobility, and Nexar, signaling its commitment to both rider benefits and autonomous vehicle development.
Analysts from BofA Securities and TD Cowen have similarly upgraded their expectations for the company, following impressive financial results and promising guidance for the fourth quarter.
On the legal front, Massachusetts voters recently approved a measure allowing ride-share drivers for companies like Lyft to form unions, an unprecedented move in the U.S. However, Lyft is also facing a lawsuit from the U.S. government over allegations of deceptive advertising practices.
In terms of autonomous vehicle development, Lyft has teamed up with Nexar, an AI-powered mobility solutions provider, to advance autonomous vehicle technologies. This partnership aims to leverage Nexar's extensive video data and Lyft's anonymized rideshare data to improve safety and expedite the deployment of autonomous vehicles.
These are just a few of the recent developments shaping Lyft's trajectory in the ride-sharing industry.
InvestingPro Insights
Recent data from InvestingPro adds depth to Barclays' analysis of Lyft. The company's market cap stands at $5.91 billion, reflecting its position in the ride-sharing industry. Lyft's revenue growth is particularly noteworthy, with a 31.54% increase in the most recent quarter, aligning with Barclays' observation of steady growth in rides and gross bookings.
InvestingPro Tips highlight Lyft's financial health and market performance. The company "holds more cash than debt on its balance sheet," which could provide flexibility as it navigates industry challenges like autonomous vehicles. Additionally, Lyft has shown a "significant return over the last week" and a "strong return over the last three months," with the stock price up 58.59% in the past quarter. This recent performance supports Barclays' view on potential share appreciation.
Analysts are optimistic about Lyft's future, with InvestingPro Tips indicating that "net income is expected to grow this year" and "analysts anticipate sales growth in the current year." This aligns with Barclays' raised price target and the company's guidance exceeding expectations.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Lyft, providing a deeper understanding of the company's financial position and market dynamics.
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