KeyBanc: Lyft's Profits Will Come With Development Of Autonomous Tech

The prospects for a big pick-up in profit for LYFT Inc. LYFT may be further down the road, when the company can use driverless cars, according to KeyBanc Capital Markets. 

The Analyst

Andy Hargreaves initiated coverage of Lyft with a Sector Weight and $67 fair value estimate. 

The Thesis

The large cost gap between car ownership and ride-hailing may mean much of the profit potential for Lyft won’t come until the driver is removed from the equation, Hargreaves said in a Tuesday initiation note — but fully autonomous ride-sharing remains “several years” away. (See the analyst's track record here.) 

In the near-term, KeyBanc expects a slowing in market growth and Lyft's pace of market share gain, factors that may inhibit revenue and EBITDA growth, the analyst said. 

Lyft’s main competitor Uber is preparing for a $10-billion IPO. 

Lyft's revenue is unlikely to top KeyBanc’s estimate without a larger capture of part of the owned car opportunity or significant share gain from Uber, both of which Hargreaves said he views as unlikely scenarios.

Price Action

Lyft shares were trading slightly higher at $61 at the time of publication Tuesday. 

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