On Thursday, Cantor Fitzgerald adjusted its outlook on Lyft (NASDAQ:LYFT) shares, increasing the price target to $16.00 from the previous $13.00 while maintaining a Neutral rating on the stock. The firm cited Lyft's third-quarter performance, which surpassed expectations with bookings and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) outperforming analyst estimates by 1% and 14%, respectively.
Lyft's guidance for the fourth quarter of 2024 anticipates a modest acceleration in bookings growth to 17% at the high end, with healthy incremental margins around 6%. This outlook is notably more optimistic than the recent results from Uber (NYSE:UBER), which projected some deceleration in ride bookings growth.
While the exact factors contributing to Lyft's expected acceleration are unclear, product innovations are believed to be supporting Lyft's stable growth and effective marketplace operations.
The company has also provided guidance indicating that Free Cash Flow (FCF) is expected to surpass $650 million for the fiscal year 2024. This forecast is a positive signal for Lyft's market guidance for the medium term. Despite the positive aspects of Lyft's third-quarter report, Cantor Fitzgerald noted that there are still risks associated with autonomous vehicles (AV), suggesting that Lyft may be overexposed due to limited partnerships in this area.
In support of the new price target, Cantor Fitzgerald has increased its 2025 expected EV/EBITDA multiple to 12 times from 10 times, reflecting a modest acceleration in bookings growth and continued healthy incremental margins. The revised price target and financial metrics reflect a cautiously optimistic view of Lyft's near-term prospects.
In other recent news, Lyft Inc (NASDAQ:LYFT). has been the subject of several key developments. Evercore ISI, Barclays (LON:BARC), Goldman Sachs, and BofA Securities have all increased their price targets for the ride-sharing company, with the new targets ranging from $19 to $20. These adjustments followed Lyft's robust third-quarter performance, which surpassed consensus estimates.
Lyft's revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) outperformed expectations, with the company also providing promising guidance for the fourth quarter. The firm's strong adoption of new products and ongoing market expansion in Canada were highlighted as positive signs for growth.
Recent strategic partnerships with DoorDash (NASDAQ:DASH), Mobileye, May Mobility, and Nexar signal Lyft's commitment to both rider benefits and autonomous vehicle development. In a landmark decision, Massachusetts voters approved a measure allowing ride-share drivers for companies like Lyft to form unions, marking a first in the U.S.
However, Lyft is also facing a lawsuit from the U.S. government over allegations of deceptive advertising practices. These recent developments underscore the complex landscape that Lyft is navigating.
InvestingPro Insights
Recent data from InvestingPro adds depth to Cantor Fitzgerald's analysis of Lyft. The company's market capitalization stands at $5.91 billion, reflecting investor sentiment following its strong third-quarter performance. Lyft's revenue growth remains robust, with a 31.54% increase in the most recent quarter, aligning with the firm's positive outlook on bookings growth.
InvestingPro Tips highlight Lyft's financial health and market performance. The company "holds more cash than debt on its balance sheet," which supports its ability to invest in product innovations and navigate potential challenges in the competitive ride-sharing market. Additionally, Lyft has shown a "significant return over the last week" and a "strong return over the last three months," with a 58.59% price total return in the past quarter, indicating growing investor confidence.
These insights complement Cantor Fitzgerald's analysis, particularly regarding Lyft's growth trajectory and market position. For investors seeking a more comprehensive view, InvestingPro offers 11 additional tips that could provide further context to Lyft's financial outlook and market performance.
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