Lyft's Bookings Guidance Bests Uber, Analyst Says: 'Better Than Feared'

Shares of Lyft Inc LYFT were climbing in early trading on Thursday, after the company reported upbeat third-quarter results.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

• Cantor Fitzgerald analyst Deepak Mathivanan maintained a Neutral rating, while raising the price target from $13 to $16.
• Roth Capital Partners analyst Rohit Kulkarni reiterated a Neutral rating, while lifting the price target from $13 to $16.
• Truist Securities analyst Youssef Squali reaffirmed a Hold rating, while raising the price target from $13 to $20.
• Wedbush analyst Scott Devitt maintained a Neutral rating, while raising the price target to $20.
• Piper Sandler analyst Thomas Champion maintained an Overweight rating, while revising the price target higher from $17 to $23.
• RBC Capital Markets analyst Brad Erickson reiterated an Outperform rating and price target of $17.
• Benchmark analyst Daniel Kurnos reaffirmed a hold rating on the stock.
• Needham analyst Bernie McTernan maintained a Hold rating on the stock.

Check out other analyst stock ratings.

Cantor Fitzgerald: Lyft’s third-quarter bookings and EBITDA beat estimates by 1% and 14%, respectively, Mathivanan said in a note. The quarterly results should "re-inspire confidence" in the company's medium-term guidance, he added.

The company maintains “healthy marketplace operations with stable growth in the near term," the analyst stated. Management's fourth-quarter guidance reflects a modest 17% acceleration in bookings, with "healthy incremental margins" of around 6%, which came in "better than feared" after rival Uber Technologies Inc UBER guided to "some deceleration in Rides bookings growth," he further wrote.

Roth Capital Partners: "Lyft is serving ads in 90% of rides and mgmt. noted that those ads are providing 7x the impact in brand perception and purchase intent and 10x click through vs. average ad performance," Kulkarni wrote in a note. Management expressed confidence in the partnership with DoorDash Inc DASH driving "greater demand based on low customer overlap," he added.

Lyft's third-quarter bookings results and fourth-quarter bookings guidance were both above expectations, the analyst stated. The company is "on track or ahead" of its three-year outlook for bookings, free cash flows, and margins, provided in June, he further said.

Truist Securities: Lyft's better-than-expected third-quarter results and fourth-quarter guide reflect "improving fundamentals," Squali said. "The company attributed the outperformance to strong demand, as pricing was largely in line with its internal expectations," he wrote.

Lyft guided to fourth-quarter gross bookings of $4.28-$4.35 billion, versus consensus of $4.23 billion, reflecting the recent partnership with DoorDash and the renewal of its 3P insurance agreements, the analyst stated. Management's strategy of improving customer experience, product innovation and pricing were "starting to bear fruit, driving active riders & rider frequency growth," he added.

Wedbush: Lyft's third-quarter gross bookings grew by 15.6% year-on-year to $4.11 billion, beating consensus of 14.9% growth and management’s guidance range of $4.0-$4.1 billion, Devitt said. Total revenue of $1.5 billion represented 31.5% growth and outperformed expectations by around 6%, while adjusted EBITDA came in around $13 million higher than the Street's estimate, he added. 

"We are encouraged by positive commentary in the quarter suggesting healthy progress along product initiatives and new partnerships," the analyst wrote. "That said, we continue to view management’s longer-term targets with some skepticism, and we remain sidelined as we wait for clear evidence of a more sustainable growth trajectory for the business," he further stated.

Piper Sandler: Lyft reported "strong" quarterly results and raised its full-year guidance, Champion said. "LYFT has not noted weakness from a US consumer and product improvements are helping drive costs lower," he wrote.

The company continues to expand in Canada and the DoorDash partnership "sounds like it could be material," the analyst stated. "FCF conversion was again strong (although partially due to one-time benefits) and ride frequency improved again sequentially," he added.

RBC Capital Markets: The company's quarterly beat on bookings was driven by "upside from rides while active riders were in line with Street," Erickson said. Higher-than-expected take rates led to the revenue upside, he added.

Higher revenues and "better contribution profit flow-through" helped the company post "a big EBITDA beat," the analyst stated. "For its Q4 guidance, the company guided bookings slightly ahead of Street and EBITDA meaningfully ahead of Street," he further wrote.

Benchmark: Lyft delivered "a much more positive conversion and frequency commentary for their ride-share business" than bigger rival Uber, despite elevated insurance costs, Kurnos said.

"Lyft deserves credit for getting more aggressive with things like reduced surge pricing and being able to focus on specific enhancements and custom use cases, with an added benefit of having more low-hanging fruit in Canada to bolster results," the analyst wrote.

Needham: The midpoint of Lyft's fourth-quarter guidance for adjusted EBITDA and bookings was around 30% and 4% above expectations, respectively, McTernan said. "This implies gross margins over 40% for the quarter, better than anticipated and an outcome for insurance renewals better than we feared," he added.

The company launched 33 new products and features on its platform this year, which helped driver hours reach a record high in the third quarter, driver growth to outpace business growth, driver preference to be 12% higher than that of Uber and significant frequency gains during the commute hours "which make up nearly half of Monday to Friday rides," the analyst stated.

Price Action: Shares of Lyft had risen by 23.44% to $17.78 at the time of publication on Thursday.

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