Lyft stock steady as Morgan Stanley maintains Equalweight rating on Waymo deal

Investing.com - Morgan Stanley has reiterated its Equalweight rating and $20.50 price target on Lyft (NASDAQ:LYFT) following the announcement of a partnership with Waymo, a subsidiary of Alphabet (NASDAQ:GOOG). According to InvestingPro data, Alphabet boasts excellent financial health with a "GREAT" overall score, suggesting strong backing for Waymo’s autonomous vehicle initiatives.

Lyft and Waymo revealed a multi-year partnership to offer fully autonomous rideshare services in Nashville starting in 2026. The service will initially launch on Waymo’s app before eventually being integrated into Lyft’s network later that year. The partnership leverages Alphabet’s substantial financial resources, with the company generating $371.4 billion in revenue and maintaining robust profit margins of nearly 59%.

As part of the agreement, Lyft will provide fleet management services in Nashville, including vehicle maintenance, charging, and depot operations. The company is expected to commit $10-15 million in capital expenditure to build a purpose-built autonomous vehicle fleet management facility.

Morgan Stanley noted the partnership demonstrates the value of Lyft’s rideshare network in the early autonomous vehicle landscape, with Waymo pursuing a multi-pronged expansion approach that includes partnerships for last-mile services.

The firm believes the transaction will be EBITDA-positive for Lyft, as the net payment from Waymo and fleet management take rate exceeds the current Nashville net human driver take rate minus insurance costs. Morgan Stanley cautioned that Nashville represents only about 1-2% of Lyft’s bookings and does not expect the partnership to impact the financial model in the near term.

In other recent news, Alphabet, the parent company of Google, reached a significant milestone by hitting a market capitalization of $3 trillion, marking the first time in its history to achieve such a valuation. This development places Alphabet among an elite group of tech companies that have reached this market cap. In a strategic move, Google announced a multiyear partnership with PayPal, integrating PayPal’s payment solutions across Google’s platforms, including Google Cloud, Google Ads, and Google Play. This collaboration aims to leverage Google’s AI capabilities to enhance PayPal’s services.

Additionally, TD Cowen has raised its price target for Alphabet to $270, maintaining a Buy rating, following a survey that positioned Google Cloud Platform as a strong contender in the cloud market. Google also opened a new data center in Waltham Cross, England, as part of a £5 billion investment in the UK to support the growing demand for AI-powered services. Furthermore, Google has eliminated data transfer fees for organizations in the EU and UK, just ahead of the EU Data Act, to foster competition in the cloud market. These developments highlight Alphabet’s ongoing efforts to expand its technological infrastructure and partnerships.

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