On Thursday, RBC Capital maintained its Outperform rating on shares of Lyft (NASDAQ:LYFT) with an unchanged price target of $24.00. The firm's outlook is based on Lyft's recent long-term guidance provided ahead of its analyst day, projecting a compound annual growth rate (CAGR) for bookings at 15% through 2027, which is above the consensus estimate of 14% extending to 2026. Lyft anticipates achieving $25 billion in gross bookings by 2027.
The rideshare company also forecasts an adjusted EBITDA margin of 4% for fiscal year 2027, surpassing the Street's expectation of 3.1% for 2026, which would translate to $1 billion in EBITDA. Furthermore, Lyft expects to convert more than 90% of its earnings into free cash flow (FCF) annually from 2025 to 2027. This outlook is an improvement from the previously guided figure of at least 70% FCF conversion for 2024.
Lyft's guidance suggests that it is on track to reach gross bookings of $25 billion by the end of the forecast period. However, the company did not alter its guidance for the second quarter or the full year of 2024. Analysts anticipate that the analyst day presentations, which began at 9 am ET, will provide additional insights into how Lyft plans to manage potential challenges, such as rising insurance costs that could affect EBITDA in the near to medium term, and the impact of autonomous vehicle technology on its business model.
In other recent news, Lyft Inc (NASDAQ:LYFT). has set ambitious financial targets for the coming years, including a Gross Bookings compound annual growth rate of around 15% from 2024 to 2027, and an Adjusted EBITDA margin of approximately 4% annually between 2025 and 2027. The company's focus on customer-centric innovation and partnerships has been credited for its positive performance trajectory. In addition, Lyft's Q1 2024 revenue was $1.28B, surpassing estimates, with adjusted EBITDA at $59M above expectations.
In analyst notes, Deutsche Bank has reiterated its Hold rating on Lyft shares, maintaining the $18.00 price target, while Wells Fargo has reiterated its Equal Weight rating, also maintaining the price target at $18.00. Furthermore, BMO Capital Markets, RBC Capital Markets, Barclays, and Piper Sandler & Co. have maintained varied ratings, with price targets ranging from $18.00 to $24.00.
InvestingPro Insights
As Lyft (NASDAQ:LYFT) continues to navigate the dynamic ridesharing market, recent data from InvestingPro showcases a mixed financial canvas. Lyft's market capitalization stands at $6.84 billion, reflecting investor sentiment and market value. Despite a challenging fiscal landscape, Lyft's revenue growth remains robust, with a 10.9% increase over the last twelve months as of Q1 2024, and a notable quarterly surge of 27.65% in Q1 2024. These figures align with RBC Capital's optimism regarding Lyft's projected compound annual growth rate for bookings.
InvestingPro Tips highlight Lyft's strong cash position, with more cash than debt on its balance sheet, which may provide the company with a buffer against operational headwinds. Furthermore, an anticipated net income growth this year, along with sales growth, supports a potentially brighter financial outlook. Analysts have revised their earnings upwards for the upcoming period, suggesting confidence in Lyft's ability to navigate market challenges and capitalize on growth opportunities. However, it's important to note the volatility in Lyft's stock price movements, which investors should consider when evaluating the company's performance.
For readers looking to delve deeper into Lyft's financial health and future prospects, InvestingPro offers additional insights. There are 12 more InvestingPro Tips available, which can provide a more comprehensive understanding of Lyft's strategic positioning and operational efficiency. Interested readers can unlock these valuable tips and metrics with an exclusive offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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