On Tuesday, TD Cowen reaffirmed its Hold rating on shares of Lyft (NASDAQ:LYFT) with a steady price target of $18.00. The firm anticipates a revenue acceleration in the second quarter of 2024, projecting a growth of 35.4% year-over-year, compared to the 27.7% increase in the first quarter of 2024.
This forecast is driven by a robust 18.5% annual increase in gross bookings and favorable year-over-year comparisons.
The analyst's revenue estimate of $1.38 billion is slightly below the consensus, by a marginal 0.2%. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to reach $99.5 million, which is within the company's guidance range of $95 million to $100 million and slightly above the consensus of $98.0 million. The projected increase in EBITDA is attributed to higher revenue and operational expenditure leverage.
TD Cowen suggests that investor attention may shift towards rideshare trends as July approaches, especially considering the current health of the US rideshare market. Despite the positive outlook on revenue and EBITDA, the firm has chosen to maintain its Hold rating and $18 price target on Lyft shares.
In other recent news, ride-hailing company Lyft has been making significant strides under new management. The company's financial performance has notably improved, with a turnaround in EBITDA as a percentage of gross bookings from negative in 2022 to a modest profit of 1.6% in 2023.
This improvement is attributed to a solid demand environment, a rational competitive landscape, and corporate restructuring in 2022.
Recent developments include the Massachusetts Supreme Judicial Court approving ballot initiatives that could redefine the relationship between Lyft and its drivers. The initiatives include recognizing drivers as independent contractors with certain benefits and allowing them to form unions. In response, Lyft has heavily invested in promoting the initiative that maintains the contractor status of drivers.
Analysts from various firms have been keeping a close eye on Lyft. Melius Research initiated coverage with a Hold rating and a $15.00 price target, while BTIG maintained a Neutral rating on Lyft, noting a deceleration in sales growth compared to the previous year. BofA Securities, despite ongoing legal battles over the status of gig workers in California, has kept a Buy rating on Lyft.
Lyft also announced ambitious financial targets for 2027, forecasting gross bookings to reach $25 billion and earnings before interest, taxes, depreciation, and amortization (EBITDA) hitting $1 billion. However, firms like Roth/MKM and UBS have maintained neutral stances, emphasizing the importance of monitoring Lyft's progress towards these goals, given potential regulatory changes and insurance cost inflation.
InvestingPro Insights
According to recent data from InvestingPro, Lyft (NASDAQ:LYFT) holds a market capitalization of $5.04 billion, with a notable revenue growth of 10.9% in the last twelve months as of Q1 2024. This aligns with TD Cowen's anticipation of revenue acceleration in the coming quarters. The company's stock price has experienced significant volatility, as reflected by a 26.24% decline over the past three months, yet analysts remain optimistic about the company's prospects.
Two InvestingPro Tips that might be particularly relevant to investors considering Lyft's stock are that the company holds more cash than debt on its balance sheet and is expected to grow net income this year. Such financial stability and anticipated income growth could be promising signs for potential investors. Moreover, with analysts predicting that Lyft will be profitable this year, there could be a positive shift in investor sentiment.
For those looking to delve deeper into Lyft's financial health and future outlook, InvestingPro offers additional insights and tips. There are 9 more InvestingPro Tips available that could guide investment decisions. To explore these further, one can visit: https://www.investing.com/pro/LYFT. To access these tips and more, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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