Why This Lyft Analyst Is Dropping Bullish Stance, Sees Serious Threat From Uber

The latest proprietary driver supply analysis indicates the competitive challenges being faced by Lyft Inc LYFT are possibly “more structural than originally thought,” according to RBC Capital Markets.

The Lyft Analyst: Brad Erickson downgraded Lyft from Outperform to Sector Perform while reducing the price target from $30 to $16.

The Lyft Takeaways: Uber Technologies Inc UBER poses a significant threat, with shorter pickup times for the first time since May 2021 and a “cheaper price getting cheaper,” Erickson said in a downgrade note.

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Both these parameters indicate “potential conversion headwinds” for Lyft, the analyst said.

Los Angeles “remains the potential canary in the coal mine given Lyft's outsized west coast exposure and Uber continuing to outperform on supply improvements” in the region, he said.

“Margin targets may limit Lyft's ability to regain share beyond geographic reversion," Erickson said.

While management’s intention to work towards profitability is “a good thing in this new economic climate,” it also has “the potential to be a limiting factor for Lyft in the event it is finding rising competitive intensity,” the analyst said.

LYFT Price Action: Shares of Lyft were down 8.47% at $12.54 Friday afternoon.

Illustration courtesy of Lyft.