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Investing.com - RBC Capital has reiterated an Outperform rating on Lyft (NASDAQ:LYFT) with a price target of $21.00, following discussions with the company’s VP of Investor Relations and Financial Planning & Analysis.
The investment firm noted that despite investor skepticism, Lyft management maintained a confident tone regarding the company’s outlook. Investor concerns primarily center on unfavorable mix trends, with bookings per ride declining and questions about long-term bookings targets. InvestingPro data shows promising signs, with revenue growing nearly 20% over the last twelve months and a strong financial health score. Get access to 15+ additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.
RBC Capital indicated that seasonal factors and Delta variant impacts are expected to be offset by other demand drivers within Lyft’s 13-17% bookings guidance range. The firm added that active rider growth is anticipated to be a tailwind in the second half of the third quarter.
The analysis highlighted that Lyft appears ahead of plan on ride cost efficiency targets, though these improvements should normalize. Margin trends remain consistent year-over-year even with the drag from the Freenow acquisition.
RBC Capital also noted that Lyft’s cash conversion in 2025 is expected to remain consistent with 2024 levels, which the firm believes exceeds current Street expectations. While autonomous vehicle capital commitments may arise from specific deals, long-term balance sheet impact should remain stable.
In other recent news, Lyft’s third-quarter guidance indicates gross bookings of $4.65-$4.80 billion, marking a 15% year-over-year increase, which surpasses analyst estimates by 3%. This comes as the company anticipates mid-teens growth in rides, compared to the 13% growth rate expected by analysts. Lyft’s second-quarter performance showed a 12% increase in gross bookings and a 14% rise in rides, falling short of Bernstein’s expectations. DA Davidson noted that Lyft’s third-quarter guidance includes two months of operations from its recent acquisition of Freenow, which closed on July 31. Benchmark maintained a Buy rating and a $20 price target, despite mixed second-quarter results, while expressing uncertainty about the impact of the Freenow acquisition on consensus estimates. Meanwhile, Susquehanna lowered its price target to $14, citing European expansion, and maintained a Neutral rating. Bernstein also adjusted its price target to $16 due to growth concerns. Cantor Fitzgerald reiterated its Neutral rating and $14 price target, highlighting that while second-quarter bookings were slightly below expectations, the company’s EBITDA performance exceeded projections.
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