On Thursday, BMO Capital Markets maintained its Market Perform rating on shares of Lyft (NASDAQ:LYFT) but reduced the price target to $13 from $19. The revision follows Lyft's recent financial updates and projections. Lyft's management had previously set a three-year compound annual growth rate (CAGR) target for bookings growth at 15% and an adjusted EBITDA margin goal of 4%.
Lyft reported a year-over-year bookings growth of 17% for the second quarter of 2024, along with an EBITDA margin of 2.6%, signaling progress towards their objectives. However, the company's guidance for the third quarter of 2024 estimates bookings growth at only 12.5% at the lower end, which is considered less than anticipated.
Moreover, the company expects an increase in rider incentives, suggesting a potential margin compression of 30 basis points quarter-over-quarter.
The financial institution's analysis indicates that Lyft is likely to conclude the fourth quarter of 2024 with bookings growth of approximately 10%. The adjusted price target reflects these projections and the potential challenges ahead.
BMO Capital's report underlines the importance of Lyft's ability to meet its growth and profitability targets amidst a competitive landscape and varying market conditions. The updated price target of $13 represents the firm's adjusted expectations based on Lyft's current financial guidance and market performance.
InvestingPro Insights
As Lyft (NASDAQ:LYFT) navigates its path toward growth and profitability, real-time data from InvestingPro offers a deeper look into the company's financial health and market position. With a market capitalization of $3.72 billion and a notable revenue growth of 19.88% in the last twelve months as of Q2 2024, Lyft shows a robust top-line expansion. However, it's worth noting that the company's operating income remains negative at -$102.77 million, reflecting ongoing challenges in achieving operational efficiency.
InvestingPro Tips highlight that Lyft holds more cash than debt on its balance sheet, which could provide a cushion against market volatility. Analysts also anticipate sales growth in the current year, aligning with Lyft's reported year-over-year bookings growth of 17% for Q2 2024.
Yet, the stock has been under pressure, trading near its 52-week low and experiencing a significant price decline over the last three months. The Relative Strength Index (RSI) suggests the stock is in oversold territory, which could interest value-seeking investors.
For those looking to delve deeper into Lyft's prospects, InvestingPro offers additional insights, with 16 more InvestingPro Tips available to help investors make informed decisions. These include expectations of net income growth this year and a forecast that the company will be profitable this year, providing a nuanced perspective on Lyft's potential turnaround.
Investors may also find the analyst-provided fair value estimate of $17 and the InvestingPro fair value of $16.19 to be useful benchmarks when considering the stock's current price and future trajectory. With the next earnings date slated for November 5, 2024, market participants will be keenly watching for further signs of Lyft's progress toward its financial goals.
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