Street Calls of the Week
On Friday, JPMorgan analyst Doug Anmuth increased the price target on Lyft (NASDAQ:LYFT) stock to $16.00 from $14.00, while keeping a Neutral rating on the company’s shares. According to InvestingPro data, Lyft has shown strong momentum with a notable return over the last month, and analysts expect the company to be profitable this year. Anmuth noted that Lyft has been performing well, citing record driver hours that have led to quicker estimated times of arrival (ETAs) and the highest level of weekly rides recorded in the last week of March.
Despite a 3% decline in gross bookings (GB) per ride, Anmuth highlighted Lyft’s continued strong growth in rides, particularly in Canada, which saw a 55% increase, and other markets like Indianapolis and Charlotte, with over 30% growth. This growth is reflected in Lyft’s impressive 27% year-over-year revenue growth and healthy gross profit margin of 35%. Stability in key markets such as San Francisco and Los Angeles was also pointed out, despite concerns regarding competition from Waymo.
Anmuth expressed optimism about the potential for rideshare market expansion due to lower or stable prices, which could attract more users. Lyft’s recent achievements, including the highest frequency of riders in five years and all-time highs in various metrics, were also seen as encouraging signs of underlying progress.
The analyst projects a compound annual growth rate (CAGR) of approximately 12% for Lyft’s gross bookings through 2027, slightly below the mid-teens target announced at the company’s Investor Day. This forecast takes into account the efforts to compensate for the loss of Delta partnerships. InvestingPro analysis reveals that Lyft holds more cash than debt on its balance sheet, potentially supporting its growth initiatives. Adjustments to JPMorgan’s estimates for 2025 and 2026 include an approximate 3% increase in both gross bookings and adjusted EBITDA projections. For deeper insights into Lyft’s growth potential and comprehensive financial analysis, investors can access the detailed Pro Research Report, available exclusively on InvestingPro.
The revised price target of $16 is based on a valuation of around 7.0 times JPMorgan’s estimated 2026 free cash flow (FCF) of $684 million, reflecting a higher multiple due to anticipated better growth and profitability. Current InvestingPro data shows Lyft generated $766 million in levered free cash flow over the last twelve months, demonstrating strong cash generation capabilities. The stock currently trades at elevated multiples, with a P/E ratio of 218x and an EV/EBITDA of 75x, suggesting investors are pricing in significant future growth expectations.
In other recent news, Lyft reported its Q1 2025 financial results, revealing a mixed performance. The company fell short of both earnings per share and revenue expectations, with earnings per share at $0.01, missing the forecast by $0.18, and revenue at $1.45 billion, $20 million below the anticipated figure. Despite these misses, Lyft’s stock rose 7.69% in aftermarket trading, reflecting investor confidence in the company’s strategic direction. Lyft achieved its strongest Q1 ever, setting records in gross bookings and free cash flow, and generated nearly $1 billion in cash over the past year. The company has expanded its driver base and entered new markets, including Europe and Canada, and increased its share repurchase program to $750 million. Analyst firms RBC Capital Markets and Wells Fargo (NYSE:WFC) have shown interest in Lyft’s pricing strategies and international expansion plans. Looking ahead, Lyft is focused on international growth and investing in autonomous vehicle technology, with plans to expand its presence in Europe through the acquisition of Free Now.
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