Lyft 'On The Precipice Of A Demand Snapback:' Why Wedbush Sees Further Upside In 2021

Ride-hailing platform Lyft Inc LYFT is expected to deliver a demand bounceback in 2021 as the coronavirus vaccine rollout accelerates to the masses by this summer and more companies resume work from the office and traveling picks up significantly, according to Wedbush Securities.

The Lyft Analyst: Wedbush analyst Daniel Ives maintained his Outperform rating on the ride-sharing stock and raised the price target to $85 from $72. Wedbush added the stock to its "Best Ideas" list.

The Lyft Thesis: Ives sees a rebound in ride-sharing metrics over the coming year and a clearer profitability profile due to significant cost cuts to push Lyft shares higher in the second half of 2021 and 2022.

Wedbush expects the economic rebound — as Lyft comes out of the pandemic — and improved metrics into the second half of 2021 will draw more investors to revisit it and rival Uber Technologies Inc. UBER.

“In a nutshell, with a quicker trajectory to profitability and the Street craving for ‘reopening plays,’ Lyft now finds itself on the precipice of a demand snapback into the rest of 2021 after navigating some dark days over the past year,” wrote Ives. 

Wedbush believes that despite a strong run the stock has had over the past few months, there’s still room for more upside in the months ahead as both Lyft and Uber shares get re-rated.

Lyft last month said it expects to hit profitability in the fourth quarter of fiscal 2021. Several analysts however believe it could cross that milestone sooner.

Price Action: Shares of Lyft, which have risen about 38% to $64.7 year-to-date, closed 4% lower on Tuesday and traded mostly unchanged in the after-hours session.

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