Lyft Analysts On How Delivery Leverages Technology Platform, Could Hurt Profit Push

Lyft analysts are sizing up the third-quarter earnings report from the ride-hailing company — and the announcement the company is exploring delivery options for retailers.

Lyft Analysts On Q3: Raymond James analyst Aaron Kessler said Lyft Inc LYFT showed gradual rides recovery in the third quarter.

The analyst, who has a Market Perform rating on the stock, said COVID-19 remains a headwind and shares are fairly valued.

KeyBanc Capital Markets analyst Edward Yruma said Lyft will benefit as an early stage reopening pick and its other mobility options like bikes and scooters.

KeyBanc has an Overweight on Lyft with a $48 price target. 

Credit Suisse analyst Stephen Ju has an Outperform rating on Lyft with a $66 price target on Lyft.

“The highlight of the 3Q20 report was Lyft pulling forward its potential timeline to profitability as cost reductions have now placed it in a position to be adjusted EBITDA positive,” the analyst said. 

Lyft Analysts On Delivery Opportunity: It's “likely preemptive at this point” to discuss incremental expansion into delivery, said Needham analyst Brad Erickson. 

Erickson said a huge investment from Lyft would be needed for the delivery business that could hurt profitability.

Needham has a Buy rating and $41 price target. 

Morgan Stanley analyst Brian Nowak is skeptical of Lyft entering the delivery business.

Nowak sees challenging economics in the segment and large investments required to scale the business.

“Lyft will be competing with sophisticated and capitalized public and private players in the space,” he said. 

Morgan Stanley has an Equal-weight rating on Lyft and raised the price target from $31 to $34. 

KeyBanc's Yruma said delivery is a long-term opportunity for Lyft.

“The delivery model allows Lyft to leverage its existing technology platform, driving incremental FCF.”

Lyft will work directly with retailers and restaurants, which Yruma said could incorporate order batching and delivery in a “cost-effective manner for same-day delivery.”

LYFT Price Action: Lyft shares were up 0.86% at $36.36 ahead of the close Wednesday. 

Related Link: Lyft Co-Founder Discusses Last Mile Delivery, Taking On Uber Eats

Photo courtesy of Lyft.