On Friday, BTIG, a financial services firm, maintained its Neutral rating on ride-hailing company Lyft (NASDAQ:LYFT), which has shown impressive revenue growth of 25.4% over the last twelve months.
According to InvestingPro data, eight analysts have recently revised their earnings estimates upward for the upcoming period. The firm's analysis suggests that Lyft may experience an upside in the fourth quarter, driven by a rise in bookings that could reach the higher end of the company's guidance for the quarter.
The analysis indicates an acceleration in bookings due to an increase in rides, which could potentially lead Lyft to surpass its fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance.
However, the firm also noted that Lyft faces increased costs, particularly in terms of insurance. While InvestingPro analysis indicates the company holds more cash than debt on its balance sheet, Lyft's recent insurance renewal is expected to result in a mid-single-digit (MSD) percentage increase in per-ride costs and over 20% year-over-year growth in total insurance costs.
Despite these cost pressures, BTIG points out that in a scenario where bookings grow by 17% and incentives offered to riders decrease by approximately 30%, Lyft could more than compensate for the higher insurance expenses. This could lead to an expansion in EBITDA margins.
The firm's stance remains cautious, despite the positive near-term outlook for Lyft. The ongoing debate surrounding the future of autonomous vehicles, or robotaxis, and their potential impact on Lyft's business model is a significant factor contributing to BTIG's decision to stay neutral.
Lyft's performance in the upcoming quarter will be closely watched by investors, as the company navigates through the challenges of increased insurance costs while capitalizing on the growth in ride bookings. The outcome of this balance between higher costs and revenue growth will be critical in determining Lyft's financial health and market position as it competes in the dynamic ride-sharing industry.
In other recent news, Uber Technologies Inc . (NYSE:UBER) is under close watch as Waymo, a leader in the autonomous vehicle (AV) rideshare sector, plans to expand services into Miami.
BTIG maintains a Buy rating on Uber with a $90 target, emphasizing that the evolving AV sector does not immediately impact Uber's near-term financial estimates. Waymo's expansion will be managed by Moove, a private entity, and is part of a broader strategy spanning six markets, three of which involve Uber.
In the meantime, Lyft Inc (NASDAQ:LYFT). has been experiencing positive adjustments in its stock outlook. Loop Capital revised its price target for Lyft shares to $23.00, maintaining a Buy rating, and BofA Securities raised its price target for Lyft to $21.
These upgrades follow Lyft's impressive Q3 2024 results, which showed a 32% year-over-year revenue increase, reaching a record $1.52 billion, and a 16% increase in gross bookings to $4.1 billion.
However, the ride-hailing company reported a GAAP net loss of $12.4 million. Analysts from various firms, including Tigress Financial Partners, KeyBanc Capital Markets, and Susquehanna, have maintained their ratings on Lyft but adjusted their price targets following these developments.
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