On Thursday, DA Davidson adjusted its price target for Lyft (NASDAQ:LYFT), trading on NASDAQ:LYFT, lowering it to $11.00 from the previous $18.00 while maintaining a Neutral rating on the stock. The firm's decision comes amid a revision of the ride-hailing company's earnings forecasts, with a particular focus on expected EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
The analyst from DA Davidson noted that while the revenue estimates for Lyft for the years 2024 and 2025 remain largely unchanged, there has been a reduction in the EBITDA forecasts. The adjustment reflects an anticipated increase in investments by the company. For 2024, the EBITDA estimate has been decreased from $355.9 million to $341.5 million. The forecast for 2025 has also seen a cut, going from $498.7 million to $425.2 million.
The revised 12-month price target of $11 reflects a multiple of 8.6 times the firm's projected 2025 EV/EBITDA for Lyft. This new target suggests a more conservative outlook on the company's valuation compared to the previous target.
The update on Lyft's financial outlook and the corresponding adjustment in the stock's price target reflects DA Davidson's analysis of the company's expected performance and investment levels in the coming years. The maintained Neutral rating indicates that the firm's stance on the stock remains unchanged despite the revised EBITDA estimates and price target.
In related news, Lyft has been the subject of a revised outlook by TD Cowen, which lowered its price target for the company to $15 from the previous $18, despite the ride-sharing company's second-quarter revenue increase of 4%. This adjustment comes after Lyft reported its first-ever GAAP profitability, with a net income of $5 million, and record quarterly active riders reaching 23.7 million.
The company's EBITDA also exceeded expectations by 5%, credited to improved incentive structures. However, Lyft's guidance for the third quarter of 2024 presented a less optimistic picture, with projections falling 2% below the midpoint of consensus estimates. The EBITDA guidance for the same period was forecasted to be 10.5% below consensus.
Despite this, Lyft reaffirmed its full-year 2024 outlook for rides and EBITDA margin, and notably increased its free cash flow forecast to approximately 90% of EBITDA conversion. These are among the recent developments for the company, which also saw its Media division's revenue increase by over 70% from the previous year.
InvestingPro Insights
In light of DA Davidson's revised price target and outlook for Lyft, InvestingPro data reveals some key metrics that may be of interest to investors. Lyft's market capitalization stands at approximately $4.12 billion, and while the company's P/E ratio appears steep at -60.67, it's important to note that the adjusted P/E ratio for the last twelve months as of Q2 2024 is significantly higher at 346.88, reflecting market expectations of future profitability. The company's revenue growth remains robust, with a 19.88% increase over the last twelve months as of Q2 2024, and a quarterly revenue growth of 40.64% in Q2 2024.
Despite the negative sentiment reflected in the revised earnings forecasts, there are positive signs in the InvestingPro Tips for Lyft. Analysts expect net income to grow this year, and sales growth is also anticipated in the current year. Moreover, Lyft holds more cash than debt on its balance sheet, which could provide some financial flexibility. However, it's worth noting that short-term obligations exceed liquid assets, which could present liquidity challenges.
For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available that delve into Lyft's financial health and market position. These tips, which include analysts' revisions of earnings and stock performance metrics over various timeframes, can offer a deeper understanding of the company's prospects. To explore these insights further, visit https://www.investing.com/pro/LYFT.
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