TD Cowen has reaffirmed its "Hold" rating on shares of Lyft (NASDAQ: NASDAQ:LYFT), maintaining a $15.00 price target for the ride-hailing company.
The position follows Lyft's announcement of a restructuring plan for its bikes and scooters division aimed at optimizing consumer offerings and enhancing the company's cost structure.
The restructuring strategy includes the disposal of certain assets and a workforce reduction of 1% of Lyft's total employees. The company expects to incur the majority of restructuring charges in the third quarter of 2024. This move is part of Lyft's efforts to streamline its operations and focus on profitability.
Lyft anticipates that the changes implemented through the restructuring plan will yield a positive financial impact. The company projects an improvement in its annualized Adjusted EBITDA by $20 million by the end of 2025. This expected increase in earnings before interest, taxes, depreciation, and amortization is seen as a crucial step towards Lyft's long-term financial health.
The analyst from TD Cowen highlighted the importance of Lyft's initiative, noting that it demonstrates the company's commitment to presenting the right products for consumers while also working on improving its cost structure.
In other recent news, Lyft's financial performance has shown positive trends with the company achieving its first-ever GAAP profitability, reporting a net income of $5 million in the second quarter. The ride-hailing service also saw record quarterly active riders reaching 23.7 million. Additionally, Lyft's Media division experienced a significant revenue boost, increasing by over 70% from the previous year.
Furthermore, Lyft and Payfare have launched new features for the Lyft Direct debit card and banking app, aimed at enhancing financial wellness for drivers. This includes Lyft Direct Savings, Balance Protection, an enhanced cashback rewards program, and additional wellness perks.
In terms of analyst outlooks, Loop Capital has adjusted its price target for Lyft to $16 from $20, while 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. TD Cowen maintained a Hold rating on Lyft's shares, and Roth/MKM along with DA Davidson lowered their price targets for the company.
InvestingPro Insights
As Lyft (NASDAQ:LYFT) undertakes strategic restructuring to enhance profitability, real-time data from InvestingPro provides a deeper understanding of the company's financial health. Lyft's market capitalization stands at $4.71 billion, reflecting its current valuation in the market. Despite the challenges, analysts are expecting a brighter future with a revenue growth of nearly 19.88% over the last twelve months as of Q2 2024, indicating a robust increase in the company's sales.
One of the key InvestingPro Tips for Lyft notes that the company holds more cash than debt on its balance sheet, which could provide financial flexibility as it navigates through its restructuring plan. Additionally, Lyft does not pay dividends, a decision that might be aligned with its focus on reinvesting earnings into growth and operational efficiency. It's also worth noting that analysts predict Lyft will become profitable this year, which aligns with the company's own projections of improved Adjusted EBITDA.
Investors monitoring Lyft's performance should also be aware that the stock has experienced significant volatility, with a price decline of over 25% in the last three months. However, this could represent a potential opportunity for those who believe in the company's restructuring efforts and long-term strategy. For more detailed analysis and additional InvestingPro Tips on Lyft, interested individuals can explore the insights available on Investing.com's Pro platform, which currently lists 11 more tips for the company.
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