On Friday, UBS reiterated a Neutral rating for ridesharing company Lyft (NASDAQ:LYFT), maintaining the same $19.00 price target for the stock. Following Lyft's first investor day, the firm expressed a more positive outlook based on the company's long-term financial targets, which surpassed consensus expectations.
Lyft has set a compound annual growth rate (CAGR) for gross bookings of approximately 15% from 2024 to 2027, which is a notable 4 percentage point increase over the pre-event consensus estimate of 11%. Additionally, Lyft aims for a 2027 Adjusted EBITDA margin of around 4%, potentially offering up to a 600 basis point improvement compared to the consensus forecast of 3.4%. Furthermore, the company expects to achieve an annual free cash flow conversion rate of 90% or higher, surpassing the consensus average of 87%.
Lyft plans to enhance margins through the use of telemetrics data to improve insurance efficiency. The company also anticipates significant contributions from Lyft Media, projecting it to add over $400 million to gross bookings by 2027. These strategies are expected to positively impact the company's financial outlook for 2027 and beyond.
Despite the positive targets set by Lyft, UBS maintains its Neutral rating. The firm views rival Uber (NYSE:UBER) as having a stronger position due to the ongoing advantages from cross-platform synergies between rideshare and delivery services, a better mid-term margin profile based on its leading rideshare category position in the U.S., and its announced plans for capital returns.
In other recent news, ride-hailing company Lyft has been the subject of numerous analyst adjustments following its inaugural Investor Day. Lyft presented ambitious financial targets, including a projected 30% or higher increase in EBITDA over consensus estimates by 2027, driven by a strategy focusing on partnership-led growth and the introduction of new ride types. Bernstein SocGen Group maintained its Market Perform rating on Lyft shares with a steady price target of $19.00. BofA Securities upgraded Lyft to Buy with a $20 target, while Evercore ISI, Loop Capital, Canaccord Genuity, and Deutsche Bank provided varied ratings and price targets.
Lyft's Q1 2024 revenue of $1.28 billion and adjusted EBITDA of $59 million exceeded expectations. The company also outlined plans to achieve $25 billion in bookings and $1 billion in EBITDA by 2027, surpassing previous consensus estimates. Lyft's management has also set a target for a 4% EBITDA margin by 2027, indicating anticipated improvements in both revenue growth and operating leverage.
Despite the positive outlook, some firms have chosen to maintain their current ratings. KeyBanc reiterated its Sector Weight rating on Lyft shares, indicating a neutral outlook, while BMO Capital Markets raised its price target for Lyft to $19, citing improvements in rider frequency, but maintained a Market Perform rating due to concerns about insurance cost inflation and potential regulatory changes in Massachusetts. These recent developments underscore Lyft's commitment to growth and profitability in the competitive ride-sharing industry.
InvestingPro Insights
As Lyft (NASDAQ:LYFT) eyes ambitious growth and efficiency targets, real-time data from InvestingPro offers a snapshot of the company's financial position. Lyft's market capitalization stands at $6.38 billion, reflecting the market's current valuation of the company. Despite a challenging earnings history, with a trailing P/E ratio of -84.69, the company has shown resilience with a revenue growth of 10.9% over the last twelve months as of Q1 2024. The growth momentum is even more pronounced on a quarterly basis, with a 27.65% increase in the first quarter of 2024.
InvestingPro Tips highlight that Lyft holds more cash than debt, a reassuring sign of financial stability. Additionally, the consensus among analysts is optimistic, with net income expected to grow and sales projected to increase in the current year. Twelve analysts have revised their earnings estimates upwards for the upcoming period, indicating potential for the company to outperform expectations.
For readers looking to delve deeper into Lyft's financial outlook and strategic positioning, InvestingPro offers additional tips and metrics. There are 11 more InvestingPro Tips available for Lyft, which can be explored for a comprehensive analysis. To access these insights, consider subscribing to InvestingPro using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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