On Friday, Loop Capital moved to upgrade shares of Lyft (NASDAQ:LYFT) from Hold to Buy, maintaining a price target of $20.00. The move follows recent developments at the ride-hailing company, which were highlighted during an analyst event on Thursday.
The firm's confidence in Lyft has grown due to the positive update and new long-term goals shared by the company. According to the firm, the new management team, led by the CEO for about a year, is successfully repositioning Lyft and understands how to execute a successful turnaround.
Lyft has set ambitious targets, aiming for a 15% compounded growth in gross bookings through 2027 and an expansion of margins to around 4% of gross bookings. Loop Capital finds these goals to be highly achievable, particularly the margin targets.
The firm also finds the projected +40% adjusted EBITDA compound annual growth rate (CAGR) through 2027 to be a solid basis for the stock valuation. They believe that Lyft's stock can sustain a 15X multiple on the firm's 2025 estimates, considering the current enterprise value is approximately 6.5X the $1 billion adjusted EBITDA target for 2027.
Lastly, the firm notes the recent pullback from the stock's post-first-quarter run as an opportunity. They see a 27% upside potential to their price target based on Thursday's closing price, reinforcing their decision to upgrade Lyft to Buy.
In other recent news, Lyft has made significant strides in its financial goals and growth strategies.
Following the company's annual Investor Day, Canaccord Genuity maintained its Buy rating on Lyft shares, reflecting confidence in the company's ambitious plans. Lyft's strategy includes initiatives for improving the driver experience, supporting ride growth, and expanding Lyft Media. The company has set financial targets for the next three years that surpass current consensus, indicating a promising future for growth and profit margins.
Furthermore, Lyft has projected a 15% annual increase in gross bookings through 2027, with its emerging advertising business expected to expand by eight times during the same period. This goal was announced during Lyft's first investor day event, demonstrating the company's commitment to revenue growth.
In terms of analysts' ratings, RBC Capital has maintained its Outperform rating on Lyft shares, while Deutsche Bank (ETR:DBKGn) reiterated its Hold rating.
Lastly, Lyft has set forth ambitious financial targets for the coming years, including a Gross Bookings compound annual growth rate of around 15% from 2024 to 2027, and an Adjusted EBITDA margin of approximately 4% annually between 2025 and 2027.
InvestingPro Insights
As Lyft (NASDAQ:LYFT) garners attention with its upgraded rating from Loop Capital and ambitious growth targets, current market data from InvestingPro provides additional context for investors. Lyft's market capitalization stands at $6.33 billion, indicating its substantial presence in the industry. Despite a challenging past reflected by a negative P/E ratio of -33.89, the company's recent revenue growth of 10.9% over the last twelve months as of Q1 2024 signals potential for a turnaround. Moreover, the stock has experienced a significant price uptick of 25.99% over the last six months, showcasing investor optimism.
InvestingPro Tips highlight that Lyft holds more cash than debt on its balance sheet and analysts expect both net income and sales to grow this year. Furthermore, 12 analysts have revised their earnings upwards for the upcoming period, which may be a testament to the company's strategic initiatives and improved execution under new leadership. It's worth noting that Lyft is anticipated to become profitable this year, a key milestone for any company.
For those considering a deeper dive into Lyft's financial health and future prospects, more InvestingPro Tips are available, providing a comprehensive analysis of the company's performance and outlook. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to a wealth of expert insights. There are 11 additional tips listed on InvestingPro for Lyft, each designed to inform and guide investment decisions.
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