By Sam Boughedda
Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) were initiated with a Sector Weight rating by analysts at Keybanc Capital Markets on Wednesday.
The analysts, led by Justin Patterson, said there are macro clouds in the near term, and ridesharing has not yet been through a recession.
"Inflation creates challenges to countercyclicality – it's more expensive to go out/order food and it is more expensive to drive," wrote Patterson. "Other factors (e.g., business travel, remote work, movement to suburbs) also raise new questions on TAM."
Focusing on Uber, KeyBanc believes Uber is well positioned to be the leader in ridesharing and a scale player in delivery.
"Profit potential is now the key debate. While we are encouraged by cost discipline, we believe FX and inflation headwinds elevate risk to forecasts," explained Patterson.
The analyst added that investors already view Uber as a long-term outperformer due to its scale. Still, they believe macro volatility elevates risk to both bookings growth and EBITDA over the next 12 months.
Patterson views Lyft as a later-stage recovery play, with the combination of driver supply investment and inflation headwinds leading to more gradual improvements in profitability.
He stated that for Lyft, "profitability and execution are the key variables to prove out," and like Uber, Lyft also faces debates around profitability.
"As a single-region, single-segment business, Lyft is also more sensitive to regional post-COVID recoveries and driver supply," the analyst explained. "As such, we view Lyft as more of a later-stage recovery – coastal markets like California are slower to return to office, and movement away from urban centers could delay investment returns."