Lyft's Q4 Highlighted By Stronger Rider, Revenue Growth; Investors Still Skeptical

Shares of Lyft, Inc. LYFT continued to drop on Wednesday after a fourth-quarter earnings report that seems to have disappointed investors, but sell-side analysts continued to recommend the stock on strong revenue growth, and even upped price expectations for shares of the ride-hailing company. 

Lyft on Tuesday beat analysts' expectations on revenue and reported a 23% year-over-year increase in the closely watched metric of active riders, while also reporting a 23% increase year-over-year in revenue per active rider. Adjusted EBITDA also topped expectations.

The Lyft Analysts

Goldman Sachs analyst Heath Terry maintained a Buy on Lyft and raised the target price from $58 to $64.

Wells Fargo's Brian Fitzgerald maintained an Overweight rating and raised the price target from $60 to $70.

CFRA's Angelo Zino maintained a Buy rating and $70 price target on the stock.

Tigress Financial's Ivan Feinseth continues to recommend a Buy on Lyft. 

The Lyft Takeaways

Lyft didn't follow the lead of competitor Uber Technologies Inc. UBER in pushing up the timeline for its profitability, and in an industry dominated in the United States by the two companies, that comparison may have been what spooked investors, said Wells Fargo's Fitzgerald.

The "unfavorable comparison ... despite solid fundamentals" is a concern, the analyst said.

Another concern is a continuing lack of clarity on how long heightened spending might continue, he said.

Still, the revenue per active rider improvement isn't being appreciated enough on the Street, said Fitzgerald, who said Lyft remains focused on profitable growth. 

And it is finding ways to cut costs, said Goldman's Terry. 

"Lyft continues to show the operational efficiencies that we’ve previously noted are critical to the ridehailing industry maturing beyond its hyper-competitive, venture-funded phase," the analyst said.

And with the after-the-print sell-off Tuesday, it looks even better, he said.

 "We believe the risk/reward in owning LYFT at these levels is favorable."

Like Uber, the company is moving beyond its early days of massive spending for the sake of growth, several analysts said.

"We like LYFT's increasing focus towards profitable growth, with an intent to place greater emphasis on higher value rides/riders rather than grow at any cost," said CFRA's Zino.

Feinseth said Lyft is boosting marketing through several incentive partnerships with various companies.

"Lyft’s ongoing innovation and marketing initiatives continue to drive accelerating growth and market share gains," he said. "I believe significant upside exists from current levels."

LYFT Price Action

Investors weren't seeing that upside on Wednesday, with shares down more than 9% at $48.96 at the time of publication.

Related Links:

Lyft Grows Ridership, Beats Revenue Estimate In Q4, But Stock Drops 

Lyft Analyst Turns Bullish, Expresses Confidence In Ride-Hailing Model 

Photo courtesy of Lyft.