Goldman Sachs Downgrades LYFT, Sees Balanced Risk-Reward

Goldman Sachs analyst Eric Sheridan downgraded the shares of LYFT Inc LYFT to Neutral from Buy and raised the price target from $12 to $15.

The analyst sees a more balanced risk-reward skew in the equity following a nearly 35% increase in the company’s share price since its last third-quarter FY23 earnings results in early November.

Since adding LYFT to the Americas Buy list on September 13, 2021, the shares are down 74% versus the S&P 500 7% growth.

The analyst remains constructive on LYFT’s operating trajectory and believes that revenue growth can reaccelerate (from GSe +7% Y/Y in 2023 to +15% in 2024) as the company starts to lap the headwinds from lower consumer prices introduced 12-months ago.

The analyst also expects revenue growth to come at high incremental margins as LYFT leverages its leaner cost structure.

The higher price target is mainly driven by higher long-term profitability estimates, as the analyst reflects on the expectations of higher normalized incremental Adjusted EBITDA margins on double-digit topline growth.

The analyst sees this inflection as already well reflected in street estimates in 2024 and continues to see execution risks around this trajectory.

Active rider growth, changes in consumer behavior, better/worse return earned on micromobility investments and regulation of driver classification are some of the risk factors for LYFT.

Price Action: LYFT shares are trading lower by 0.71% at $13.24 on the last check Thursday.