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Lyft neutral rating maintained, bookings outlook improved

EditorLina Guerrero
Published 09/04/2024, 05:07 PM
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LYFT
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On Wednesday, a prominent financial firm maintained a Neutral stance on Lyft shares (NASDAQ:LYFT), acknowledging stable quarter-to-date (QTD) sales growth and slight adjustments to third-quarter bookings and earnings estimates. The firm's evaluation follows Lyft's announcement today regarding cost savings from a bike-scooter business restructuring.

The firm's tracking indicates that while there has been a deceleration in ride numbers, this has been counterbalanced by a rise in average selling prices (ASP). The market share of Lyft compared to its competitor Uber (NYSE:NYSE:UBER) appears to be stable or slightly increasing on a quarter-over-quarter basis.

The updated forecast includes a slight increase in third-quarter bookings, from a previous estimate of 14% growth to 15%, which falls within the company's guidance range of 13-15%. Moreover, the projected EBITDA for the quarter has been revised from $92 million to $95 million, aligning with Lyft's EBITDA guidance of $90-95 million.

The adjustments factor in the current quarter trends and incorporate approximately $20 million in annualized savings anticipated from the restructuring of the bike-scooter segment, which was announced earlier today. The firm also increased its 2025 EBITDA estimate from $459 million to $477 million, taking into account the expected savings and a slight uptick in bookings.

The financial firm's commentary underscores the impact of the bike-scooter restructuring on Lyft's financial outlook, highlighting the company's efforts to streamline operations and achieve cost efficiencies. The updated estimates reflect a cautiously optimistic view of Lyft's near-term financial performance while maintaining a neutral position on the stock's rating.

In other recent news, Lyft has made strides in its financial performance, achieving its first-ever GAAP profitability with a net income of $5 million in the second quarter. The company also reported a record number of 23.7 million active riders and saw a significant revenue boost in its Media division, which increased by over 70% from the previous year.

Furthermore, Lyft has announced a restructuring plan for its bikes and scooters division, which includes asset disposal and a workforce reduction of 1% of the company's total employees.

TD Cowen has maintained its "Hold" rating on Lyft, while Loop Capital has adjusted its price target for Lyft to $16 from $20, maintaining a Buy rating. Nomura/Instinet upgraded Lyft's stock rating from Reduce to Neutral, citing improved cash flow due to cost reductions and operational changes.

Lyft and Payfare have also launched new features for the Lyft Direct debit card and banking app, aiming to enhance financial wellness for drivers. These are among the recent developments for Lyft, reflecting the ride-hailing company's ongoing financial and operational adjustments.

InvestingPro Insights

As Lyft (NASDAQ:LYFT) navigates its strategic cost savings and restructuring efforts, the company's financial health and stock performance remain critical for investors. According to InvestingPro data, Lyft holds a market capitalization of approximately $4.63 billion, signaling a significant presence in the ride-sharing industry. Despite a negative P/E ratio, reflecting challenges in achieving profitability, Lyft has shown a robust revenue growth of nearly 19.88% over the last twelve months as of Q2 2024, which aligns with the financial firm's observation of stable sales growth.

InvestingPro Tips further indicate that analysts expect Lyft's net income to grow this year and anticipate sales growth in the current year. These projections may provide a sense of confidence in Lyft's ability to navigate its current challenges. Additionally, it's worth noting that analysts have revised their earnings downwards for the upcoming period, which may warrant caution for investors considering Lyft's stock. For those interested in a deeper analysis, there are over 10 additional InvestingPro Tips available, offering more nuanced insights into Lyft's financials and stock performance.

The company's stock price has experienced significant volatility, with a 25.67% drop over the last three months and a 33.55% decline over the last six months. However, with a recent price close at $11.35 and an InvestingPro fair value estimation of $17.8, there may be potential for recovery. As Lyft continues to adapt its business model, these metrics and insights can help investors keep a pulse on the company's progress and make informed decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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