Benzinga - by Anusuya Lahiri, Benzinga Editor.
Lyft, Inc (NASDAQ:LYFT) and DoorDash, Inc (NASDAQ:DASH) stocks climbed after RBC Capital upgraded stock ratings and price targets.
Analyst Brad Erickson upgraded Lyft from Sector Perform to Outperform and raised the price target from $17 to $23.
Erickson upgraded DoorDash from Sector Perform to Outperform and raised the price target from $130 to $175.
The improved execution of Lyft’s core business is foundational to the analyst’s thesis.
It allows it to build scale and marketplace efficiency to grow down-market products that drive elasticity and give potential partners greater confidence in being a long-term sustainable competitor, the analyst wrote in the note.
His analysis found that price continues to move in relative lock-step with Uber Technologies, Inc (NYSE:UBER) while pick-up times as a reflection of driver supply continue to move within a close range, raising his confidence that it has surge pricing even further under control.
Erickson has greater confidence in 2024 EBITDA estimates with insurance and driver incentive costs adequately embedded in the model.
The analyst is intrigued by Lyft’s improving competitive position, which allows it to partner in food delivery.
He does not need the DoorDash partnership for his thesis to play out, but it’s too intriguing to consider.
Erickson projects first-quarter revenue of $1.18 billion and adjusted EBITDA of $53.9 million for Lyft.
The analyst noted new verticals/international may be on the doorstep of stabilizing profitability; he had underappreciated the resilience of DoorDash’s order growth due mainly to frequency, which should continue to be a multi-year mid-to-high-teens grower.
He is intrigued at DoorDash’s optionality to establish partnerships, particularly with Lyft, which could drive significant incremental orders and bring its loyalty program closer to equal footing with Uber.
DoorDash’s cohort growth makes the macro consumer slow down. It is its most significant risk to top-line growth, where he had underappreciated its durability.
Erickson noted Lyft’s improving execution makes it an increasingly viable partner, which could drive a mid-single digit uplift to orders on first-order assumptions with additional upside as frequency & category expansion proliferate.
Erickson projects first-quarter revenue of $2.47 billion and adjusted EBITDA of $378.6 million for DoorDash.
Price Actions: LYFT shares traded higher by 4.98% at $17.17 on the last check Monday. DASH shares traded higher by 4.73% at $133.49.
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Latest Ratings for DASH
| Feb 2022 | JMP Securities | Maintains | Market Outperform | |
| Feb 2022 | JP Morgan | Maintains | Neutral | |
| Feb 2022 | Needham | Maintains | Buy |
View the Latest Analyst Ratings
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