Truist cuts Lyft target to $13, maintains hold amid growth concerns By Investing.com

On Wednesday, Truist Securities revised its price target for shares of Lyft (NASDAQ:), lowering it to $13.00 from the previous $18.00, while keeping a Hold rating on the stock. The adjustment follows Lyft’s second quarter of 2024 results, which met expectations, and a third-quarter guide that was considered less robust.

The firm noted that while Lyft’s strategies are yielding positive results in terms of active riders and rider frequency, there are still uncertainties regarding the company’s long-term growth targets. Lyft’s management has set an ambitious goal for a mid-teens growth rate in Gross Bookings (GBs) from the fiscal year 2024 through 2027, as announced during their Analyst Day on June 6, 2024.

The analyst from Truist Securities expressed skepticism about Lyft’s ability to achieve these long-term targets, given the current guidance for growth slightly above the Rides’ double-digit rate for FY24, especially when compared to the faster growth rate of its competitor, Uber (NYSE:).

Despite these concerns, the analyst acknowledged that Lyft’s focus on pricing, customer experience, and product innovation has led to improvements. However, potential economic downturns, advancements in autonomous driving technology, and regulatory changes were cited as ongoing risks that could impact the company’s performance.

In other recent news, Lyft showcased a solid Q2 performance, reporting gross bookings and profitability that modestly surpassed expectations. However, the company’s Q3 guidance for gross bookings and adjusted EBITDA was slightly below consensus, according to Canaccord Genuity. Lyft’s commitment to driver engagement was evident as it achieved its fastest pickup times in four years. The company also announced the extension of its partnership with Payfare Inc. for the Lyft Direct program, a financial service for Lyft drivers.

In a significant legal development, the California Supreme Court ruled in favor of ride-hailing services like Lyft, maintaining the classification of drivers as independent contractors. This decision confirms the voter-approved Proposition 22. Moreover, Lyft reported its first net profit, with a significant increase in revenue for the second quarter. This improvement was attributed to restructuring efforts and a thriving ride-share market.

On the corporate front, Lyft announced the upcoming departure of Kristin Sverchek, the company’s President, effective August 20, 2024. Sverchek will continue to serve as an advisor until November 30, 2024. Additionally, TD Cowen reaffirmed its Hold rating on shares of Lyft, anticipating a revenue acceleration in the second quarter of 2024, projecting a growth of 35.4% year-over-year. These are some of the recent developments in Lyft’s journey.

InvestingPro Insights

As Lyft (NASDAQ:LYFT) aims to navigate the competitive ride-sharing landscape, recent data from InvestingPro sheds light on its financial health and market performance. A key highlight is that Lyft holds more cash than debt on its balance sheet, which could provide a buffer in navigating economic uncertainties. Additionally, analysts are optimistic about Lyft’s revenue, forecasting sales growth in the current year and predicting the company will turn profitable this year. These insights align with Truist Securities’ recognition of Lyft’s positive active riders and rider frequency trends.

From a market perspective, Lyft’s stock has experienced significant volatility, with a notable decline over the last week and month. The company’s market capitalization stands at $3.66 billion, reflecting investor sentiment and market conditions. Despite the recent downturns, Lyft’s revenue has grown by 10.9% in the last twelve months as of Q1 2024, indicating potential for recovery. However, with a high Price / Book multiple of 9.01, investors may weigh the stock’s value against its tangible assets. For those seeking a deeper analysis, InvestingPro offers additional tips on Lyft’s financial outlook and stock performance (https://www.investing.com/pro/LYFT).

Investors considering Lyft’s stock will find these metrics and insights valuable in assessing the company’s current position and future potential. With more tips available on InvestingPro, individuals can gain a comprehensive understanding of Lyft’s financial trajectory and market dynamics.

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