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Roth/MKM monitoring Lyft's 'impressive' three-year outlook, keeps stock neutral

Published 2024-06-10, 01:24 p/m
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On Monday, Roth/MKM maintained a Neutral stance on Lyft shares (NASDAQ:LYFT), with a price target of $19.00. This follows Lyft's inaugural investor day held last Thursday, where the company presented an ambitious three-year outlook.

Lyft forecasts gross bookings to reach $25 billion, with earnings before interest, taxes, depreciation, and amortization (EBITDA) hitting $1 billion, and free cash flow (FCF) amounting to $900 million by 2027. The company also anticipates over 15% growth in ridesharing and more than 2% in advertising penetration.

The projection outlined by Lyft suggests a robust roadmap for the firm's financial future. This outlook is seen as a positive indicator for Uber Technologies (NYSE:UBER), which has been rated as a Buy. The ridesharing growth and advertising penetration figures are particularly noteworthy, as they provide a benchmark for evaluating Lyft's potential performance relative to its industry peers.

Despite the promising long-term targets, Roth/MKM expressed caution, noting Lyft's previous pattern of establishing and then failing to meet ambitious goals. The firm emphasized the importance of monitoring Lyft's progress toward achieving the projected milestones, especially under the guidance of the new management team.

Lyft's first investor day since its initial public offering in March 2019 was a significant event, offering insights into the company's strategic direction and financial aspirations. It also served as an opportunity for Lyft to articulate its value proposition to investors and set expectations for the coming years.

The announcement comes at a time when the ridesharing industry continues to evolve, with companies like Lyft and Uber striving to solidify their market positions and achieve profitability. Lyft's outlined goals for 2027 reflect the company's ambition to not only grow its core business but also to expand into new revenue streams such as advertising.

In other recent news, ride-hailing company Lyft has been the subject of several analyst adjustments. UBS reiterated a Neutral rating, maintaining a $19.00 price target. Bernstein SocGen Group also maintained a Market Perform rating with a steady $19.00 target. BofA Securities upgraded Lyft to Buy with a $20 target, while Evercore ISI, Loop Capital, Canaccord Genuity (TSX:CF), and Deutsche Bank (ETR:DBKGn) provided varied ratings and price targets.

Lyft's Q1 2024 revenue of $1.28 billion and adjusted EBITDA of $59 million exceeded expectations. The company's management has set targets for a 4% EBITDA margin by 2027, indicating anticipated improvements in both revenue growth and operating leverage. Lyft aims to achieve $25 billion in bookings and $1 billion in EBITDA by 2027, surpassing previous consensus estimates.

Lyft plans to enhance margins through the use of telemetrics data to improve insurance efficiency and expects significant contributions from Lyft Media, projecting it to add over $400 million to gross bookings by 2027. These strategies are expected to positively impact the company's financial outlook for 2027 and beyond.

However, some firms have chosen to maintain their current ratings due to various factors, including potential regulatory changes and insurance cost inflation.

InvestingPro Insights

As Lyft (NASDAQ:LYFT) charts a course for growth and profitability, current market data and analyst insights provide a more granular view of the company's financial health and stock performance. According to InvestingPro data, Lyft holds a market capitalization of approximately $6.29 billion, indicating its significant presence in the ridesharing industry. Despite not being profitable over the last twelve months, the company's revenue growth has been positive, with a notable increase of 27.65% in the most recent quarter of 2024 compared to the same period last year. This aligns with Lyft's ambitions for expansion and increased market penetration.

InvestingPro Tips highlight that Lyft is expected to see net income growth this year, with analysts predicting the company will become profitable. Additionally, 12 analysts have revised their earnings estimates upwards for the upcoming period, signaling confidence in Lyft's financial trajectory. These insights may reassure investors who are wary of Lyft's past challenges in meeting its ambitious goals.

For those considering an investment in Lyft, InvestingPro offers additional tips and a comprehensive analysis, which could be particularly valuable given the stock's volatility. Prospective investors can unlock these insights and receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24. With these resources at hand, investors can make more informed decisions as they watch Lyft's journey toward its 2027 targets.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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