3 Reasons To Buy Lyft Stock

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While you may not be able to find a discount on your ride, you could be able to buy Lyft stock for a good price if you do it at the right time. In light of Lyft's upcoming earnings, here are three reasons to buy the stock:

Lyft LYFT Could Have A Better Competitive Position

The tide seems to be turning in terms of demand between Lyft and Uber.

"When asking our contacts about the demand trends over the past year (4Q19 to 4Q18), a net 13% of contacts believed demand was increasing in their market, which is an acceleration from our 3Q survey reading of 8%. From our perspective, demand was more firm at Lyft compared to Uber,"  John Healy of Northcoast Research said in a note issued Feb. 9.

Uber's UBER Numbers Were Good

Lyft's peer Uber Technologies Inc UBER was the first of the two to report fourth-quarter results on Feb. 6.

"When peer Uber reported Q4 results, we saw better numbers and heard encouraging items," Healy said. 

Those were:

• Strong business growth, with 41% growth in U.S. operations including Uber Eats and rideshare bookings up 31%.
• A pull-forward in Uber's profitability goals; adjusted EBITDA is now expected to be positive by the fourth quarter of 2020.
• Rideshare margins were 24%, with incremental drop-through of almost 80% in the fourth quarter.

Northcoast has a Buy rating on Lyft with a $60 price target.

M&A Possible For LYFT

Autonomous vehicles are all the rage in the ride-hailing business, with both Uber and Lyft working toward autonomous technology.

"We do not think it is out of the question that the first forms of autonomous technology will be monetized in more of a network or public transportation model. We believe a pure play network such as Lyft could be increasingly attractive from an M&A standpoint to the future winners of the autonomous race," Healy said.

Lyft Price Action

The stock was trading down slightly at $53.71 at the time of publication Tuesday.

Photo courtesy of Lyft.