Market Overview

Raymond James Sees Opportunity In Lyft Sell-Off

Share:
Raymond James Sees Opportunity In Lyft Sell-Off

LYFT Inc (NASDAQ: LYFT) is trading down more than 16 percent off its March IPO price, offering what Raymond James considers an “attractive entry point.”

The Analyst 

Justin Patterson initiated coverage of Lyft with an Outperform rating and $85 price target.

The Thesis

By Patterson’s estimate, three factors work in Lyft’s favor. (See the analyst's track record here.) 

First, ride-sharing will change consumer behavior, and the evolving transportation industry will catalyze a decline in costs and rise in share of passenger miles, he said in a Tuesday initiation note. 

Second, the market can support not only multiple players, but multiple winners.

“Ridesharing is a natural duopoly where price, ETA and service quality dictate consumer choice,” Patterson said. “Much like Expedia Group Inc (NASDAQ: EXPE) benefited from secular growth between 2011-2016, Lyft should benefit from the ridesharing tailwind.”

Third, profitability is achievable by increasing service frequency and leveraging fixed costs, the analyst said. 

“Given ridesharing is at [less than] 1% U.S. penetration, we believe revenue growth can sustain [about] 30% per annum over the medium term and that EBITDA margins can expand materially." 

Patterson forecast EBITDA margins above 20 percent with a revenue growth rate as fast as Booking Holdings Inc (NASDAQ: BKNG)’s.

Still, Lyft has its risks. Widespread adoption of ride-hailing may take time, and competitors may emerge and seize market share. Additionally, operating losses could grow if revenue fails to accelerate, and Lyft may be forced to pursue a capital raise, according to Raymond James. 

Price Action

Lyft shares were down 1.19 percent at $60.21 at the time of publication Tuesday. 

Related Links:

Guggenheim: Uber's Pre-IPO Numbers Give Insight On Lyft's Business

Bird Is Bringing More Electric Scooters To European Cities

Photo courtesy of Lyft. 

Latest Ratings for LYFT

DateFirmActionFromTo
Jan 2021Morgan StanleyMaintainsEqual-Weight
Jan 2021BTIGMaintainsBuy
Dec 2020KeyBancMaintainsOverweight

View More Analyst Ratings for LYFT
View the Latest Analyst Ratings

 

Related Articles (LYFT)

View Comments and Join the Discussion!

Posted-In: Justin Patterson Raymond James ride-hailingAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
SLGMorgan StanleyMaintains58.3
FASTMorgan StanleyMaintains49.0
EGHTMorgan StanleyMaintains35.0
CARMorgan StanleyMaintains44.0
BKMorgan StanleyMaintains50.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com