RBC Capital cuts Lyft stock price target to $21 from $24

On Wednesday, RBC Capital Markets analyst Brad Erickson revised the price target for Lyft stock, trading on (NASDAQ:LYFT), to $21.00, a decrease from the previous $21.00, while maintaining an Outperform rating. Erickson noted that the company’s fourth quarter faced some challenges, but also highlighted Lyft’s significant rides growth at the start of the year and its effective competition with Uber (NYSE:UBER) in terms of service levels and customer conversions. The company’s strong performance is reflected in its impressive 31.4% revenue growth over the last twelve months, with total revenue reaching $5.8 billion. According to InvestingPro analysis, Lyft shows promising financial health with multiple positive indicators, including expected sales growth for the current year.

Despite the positive aspects, Lyft is experiencing more aggressive pricing from Uber than anticipated, which is impacting the outlook for first-quarter bookings. As a result, RBC Capital has lowered its estimates and target for Lyft shares. Erickson acknowledged the difficulties faced by Lyft as the second player in the market, which makes it more vulnerable to external factors. He also expressed skepticism about Lyft’s ability to meet its 2027 targets. The company’s current market capitalization stands at $5.9 billion, with the stock showing significant momentum, having gained over 48% in the past six months.

However, Erickson remains optimistic about Lyft’s long-term prospects, citing the company’s ability to sustain competition. He believes that Lyft is positioned to achieve significant margin and free cash flow growth over time. This outlook is supported by the current valuation of Lyft stock, which Erickson pointed out is heavily discounted at 4 times the enterprise value to the targeted 2027 EBITDA.

The revised price target and maintained Outperform rating reflect RBC Capital Markets’ view that, despite near-term headwinds, Lyft is still a viable competitor in the ridesharing industry with the potential for substantial future growth. Erickson’s comments suggest that, while short-term challenges persist, Lyft’s strategic positioning and growth trajectory offer a positive outlook for investors.

In other recent news, Lyft’s stock target has been revised by multiple analysts following its fourth-quarter earnings report. DA Davidson lowered its target to $15, citing Lyft’s slightly below expectations Gross Bookings, despite a robust 15% increase and a 10% rise in Active Riders. The firm also noted Lyft’s guidance for slower Gross Bookings growth due to competitive pricing pressures.

Similarly, BMO Capital Markets reduced its price target to $15, attributing it to Lyft’s first-quarter 2025 earnings bookings growth guidance and the recent termination of Lyft’s partnership with Delta. However, the analyst highlighted the potential payoff from Lyft’s investment in autonomous vehicles.

Benchmark, on the other hand, maintained a Buy rating and a $20 price target on Lyft’s shares, acknowledging the company’s potential for efficiency gains despite challenges. The analyst also noted Lyft’s recent announcement of a $500 million stock buyback program.

Cantor Fitzgerald and JPMorgan also reduced their price targets to $14 and $16 respectively, citing concerns about Lyft’s growth prospects due to recent shifts in industry pricing trends and intensifying competition. These adjustments reflect recent developments and the challenges Lyft faces in the rideshare industry.

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