Riding High: Analysts Upgrade Lyft As Data Improves And Cost-Cutting Pays Off

LYFT Inc’s LYFT preliminary ridesharing data, reviewed by analysts at KeyBanc Capital Markets, appears stable, with Lyft’s data actually improving over the course of December.

The Lyft Analyst: Preliminary data, coupled with aggressive cost-cutting actions in recent quarters and an ongoing recovery along the West Coast, has led KeyBanc’s analyst Justin Patterson to upgrade Lyft from Sector Weight to Overweight with a $24 price target.

KeyBanc sees potential for positive revisions and multiple expansion in Lyft's EBITDA over the course of 2023.

Check out more analyst notes, here.

Patterson believes that Lyft's aggressive cost reductions provide upside to consensus EBITDA estimates, and KeyBanc analysts have raised the company's 2024E EBITDA by 2% to $848 million.

This is below the 2024 target of $1 billion, but above the Street's estimate of $828 million.

Additionally, Patterson noted its Key First Look Data showed material improvement in growth through the fourth quarter, driven by the quarter-over-quarter acceleration of indexed customer and transactions growth. This is seen as a positive sign that growth has stabilized and can improve into 2023 as comps get gradually easier.

Further, Patterson believes there is upside to current estimates driven by cost initiatives and West Coast recovery, which creates a case for multiple expansion at current levels.

In comparison, rival Uber Technologies Inc UBER is "currently trading at ~13x their 2024E EBITDA with high-teens growth and similar levels of margin expansion."

Price action: Shares of Lyft are trading 0.94% higher on Tuesday morning at $15.49.

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