Oppenheimer sets Lyft stock Outperform with $15 target

On Wednesday, Oppenheimer initiated coverage of Lyft (NASDAQ:LYFT), currently trading at $10.89, giving the rideshare company an Outperform rating and setting a price target of $15.00. According to InvestingPro analysis, Lyft appears undervalued based on its Fair Value metrics, with strong fundamentals including a solid free cash flow yield. The firm’s analysis suggests that the rideshare industry will continue to present a competitive alternative to the rising costs of car ownership, driving sustained double-digit growth for market players like Lyft.

Chad Larkin of Oppenheimer highlighted that Lyft’s investments in its supply chain have been putting downward pressure on fares, which in turn has contributed to stable and healthy growth in active riders and ride frequency, with increases of 10% and 6% in 2024, and 10% and 8% in 2023 respectively. This operational efficiency is reflected in the company’s impressive 31.39% revenue growth over the last twelve months. Larkin noted that Lyft has effectively reduced costs by cutting employee headcount by 34% since 2022, thereby enhancing the company’s EBITDA leverage.

The firm’s Outperform rating is based on a projection of 10 times Lyft’s estimated 2026 EBITDA. Additionally, Oppenheimer’s analysis accounts for a potential broad consumer pullback due to tariffs, with their 2025 gross bookings (GB) and EBITDA estimates being 2% and 8% below the consensus on the Street. Even with these conservative figures, Larkin stated that Lyft’s current valuation at 9 times Oppenheimer’s reduced 2025 estimates appears to factor in the potential impact of tariffs.

Supporting the optimistic outlook, Oppenheimer conducted a proprietary survey of 1,000 consumers which corroborated the firm’s positive view on Lyft. The survey results, together with the company’s strategic cost rationalization and investment in technology, such as robotaxi advancements that could lower fares over time, underpin the Outperform rating and the $15 price target set by Oppenheimer. With Lyft’s next earnings report scheduled for April 30, InvestingPro subscribers can access 12 additional key insights and a comprehensive Pro Research Report, helping investors make informed decisions ahead of this crucial announcement.

In other recent news, Lyft has made a significant move by acquiring the European mobility platform FreeNow from BMW (ETR:BMWG) and Mercedes-Benz (OTC:MBGAF) for approximately $198.40 million. This strategic acquisition is expected to nearly double Lyft’s potential market, expanding its operations into 11 countries across Europe. The deal will allow Lyft to increase its annualized Gross Bookings by about €1 billion, diversifying its revenue streams. Analysts at TD Cowen have maintained a Hold rating on Lyft but reduced the price target to $12, citing solid yet decelerating growth in first-quarter Gross Bookings. Meanwhile, BofA Securities downgraded Lyft’s stock rating from Buy to Underperform, lowering the price target to $10.50 due to competitive pressures from autonomous vehicle technologies. Despite these challenges, Lyft continues to grow its user base, which has increased by 10% year-over-year to 20 million users. The acquisition of FreeNow aligns with Lyft’s strategy to enhance its global presence and tap into the European market. As Lyft prepares to report its first-quarter 2025 results, investors are focused on rideshare volume trends and the company’s approach to navigating broader economic challenges.

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