Lyft’s Upbeat Guidance Has Wall Street Hopeful but Wary
Barron's
Jun 07, 2024
DJ Lyft's Upbeat Guidance Has Wall Street Hopeful but Wary -- Barrons.com
Friday, June 07, 2024 11:54:23 AM ET
Angela Palumbo
Lyft stock was rising Friday as analysts provided commentary in response to the ride-hailing company announcing long-term financial targets at its investor-day meeting on Thursday.
Lyft provided upbeat long-term financial guidance on Thursday that helped the stock rise 1% at the close.
"Over the last year we've transformed our business and established a strong foundation for improving profitability and cash flow," Chief Financial Officer Erin Brewer said in the news release. "The financial targets we are announcing today reflect our expectations of healthy top-line growth and margin expansion as we deliver on our strategic priorities."
Some analysts viewed the announcements made during the investor day as not only a positive, but a reason to get in on the stock. Gordon Haskett analyst Robert Mollins upgraded Lyft stock to Buy from Hold on Friday, and increased his price target to $20 from $17.
"With Lyft's shares increasing just 1% on the back of what we expect will be solid upward revisions to consensus estimates, we believe investors are discounting Lyft's ability to achieve the targets and see the shares offering a low-cost, high-reward option," Mollins wrote in a note.
BofA Securities analyst Michael McGovern was also more optimistic after the investor day. He double upgraded Lyft stock to Buy from Underperform, and increased his price target to $20 from $15.
"Although Long-term targets weren't overwhelming (we thought $1 billion in [earnings before interest, taxes, depreciation, and amortization] by 2026 could be possible, versus 2027), we see most growth and margin upside through the end of this year, and reasonable [long-term] targets could be driven by greater management prudence/conservatism," McGovern wrote in a report.
Lyft stock could use a boost. Shares have gained 4.7% so far this year compared with the S&P 500's 12% increase. Besides lagging behind the market, shares are down 78% from the initial public offering price of $72 in 2019. One major headwind for the company has been competition. Uber Technologies is Lyft's largest competitor, and that stock has gained about 53% since its 2019 IPO.
Generally, Wall Street is on the sidelines regarding Lyft stock. Of the 42 analysts surveyed by FactSet, 13 have Buy ratings, 28 are at Hold, and one has a Sell rating. On the other hand, of 52 analysts who cover Uber stock, 48 have Buy ratings, four are at Hold, and there's not a bear in sight.
Wedbush analyst Scott Devitt ticked up his price target for Lyft stock to $19 from $18 after the Investor Day, but maintained a Neutral rating. He wrote in a note that while he is encouraged by the strength of the outlook, he recognizes that "there is execution risk given the multiyear nature of the guidance, and uncertainty related to macro and competitive dynamics over an extended time horizon."
Deutsche Bank Research analyst Benjamin Black, who rates Lyft stock at Hold with a $18 price target, wrote that "with guidance for cumulative free cash flow of about $2.3 billion from fiscal 2024 to 2027, we believe investors expected a share repurchase announcement, which did not occur."
In Friday trading, Lyft shares are up 3.5% to $16.25, while Uber stock is down 0.3% to $68.72.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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