Uber, Lyft Stocks Struggle In Debut Year: What's In Store For 2020?

December 20, 2019 4:31 pm
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Uber, Lyft Stocks Struggle In Debut Year: What's In Store For 2020?

Uber Technologies Inc (NYSE:UBER) shares are down about 28% since the ride-hailing service's IPO, and Lyft Inc (NASDAQ:LYFT) shares are down about 39%. 

What's In Store For Uber In 2020? 

Multiple analysts are maintaining bullish ratings on Uber despite the stock's downward trend. 

On Nov. 5,, Morgan Stanley analyst Brian Nowak maintained an Overweight rating on Uber and raised the price target from $53 to $55. Nowak named four reasons to be bullish heading into 2020:

  • Profitability is targeted to come a year earlier than expected.
  • Rides beat across the board, while EBITDA margins were already at 22%, with incrementals at 40%.
  • Eats bookings were 4% light, but EBITDA losses were 10% smaller.
  • Uber talked to seeing early signs of rationalization/discipline in the online food space.

On Dec. 10, Citigroup analyst Itay Michaeli maintained a Buy rating on Uber and raised the price target from $45 to $46. Michaeli named three reasons to be bullish heading into 2020:

  • The company has a faster ramp to adjusted EBITDA profitability driven by rides.
  • A lower assumed Eats margin reflects competitive pressures, but a high rides margin reflects current momentum and management commentary.
  • A somewhat higher DCF discount rate reflects recent regulatory developments at Rides and competitive pressures in Eats.

Stifel Bullish On Lyft

Stifel analyst Scott Devitt reiterated a Buy rating on Oct. 31 and lowered the price target from $80 to $70 on Oct. 31. 

"Longer term, Lyft's margin profile has the potential to improve due to the marketplace dynamics in the business model, including high costs of individual asset ownership on the supply side and industry-specific costs paid by the company," the analyst said. 

Devitt named four reasons why he recommends Lyft:  

  • Lyft is solving real consumer frictions in personal transportation with a technology-centric model.
  • The company has a long-term strategic focus led by company founders.
  • Lyft addresses large potential profit pools in the personal transportation industry.
  • The company has a unique strategic asset with long-term optionality from investments in non-core areas.

Uber shares were up 1.64% at $30.45 at the close Friday, while Lyft shares were 3.54% higher at $47.92. 

Related Links: 

Daimler, BMW Car-Sharing Service To Leave North America

Why Investors Should Care About Uber Eats Sale In India

Photo courtesy of Lyft. 

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