Wall Street analysts came away mostly bullish from an investor day hosted by Lyft, with analysts at Bank of America giving the ride-hailing company a double upgrade to a buy rating. Lyft stock jumped early Friday before giving back its gains.
The positive analysts views came after Lyft offered new long-term guidance. The company said Thursday that it expects gross bookings to grow at an annual rate of 15% through 2027. The firm also forecast adjusted EBITDA margin of about 4% on a full-year basis in 2027. Further, Lyft projects free cash flow conversion of more than 90% annually each year between 2025 and 2027.
On the stock market today, Lyft stock ended the day roughly a half-percent lower at 15.59, despite gaining nearly 5% in morning trading. That followed the same pattern as Thursday. Lyft shares jumped by more than 10% in early trading before easing back to a roughly 1% gain.
Lyft Profitability Push
The new outlook highlights Lyft's push to be more profitable. Lyft's adjusted EBITDA margin — earnings before interest, taxes, depreciation and amortization — was 1.6% last year. Lyft expects adjusted margins of about 2.1% this year. The adjusted core profitability metric is measured as percentage of gross bookings.
"Over the last year we've transformed our business and established a strong foundation for improving profitability and cash flow," Chief Financial Officer Erin Brewer said in a news release. "The financial targets we are announcing today reflect our expectations of healthy top-line growth and margin expansion as we deliver on our strategic priorities."
Lyft did not update its guidance for the current quarter and fiscal year. In its earnings report last month, Lyft projected bookings growth in the midteens for the full year.
Analysts Turn Bullish On Lyft
Following the report, analysts with BofA Securities bumped up their rating on Lyft shares to buy, compared to a previous underperform. Analysts set a price target of 20 for Lyft stock. BofA analyst Michael McGovern particularly liked Lyft's projected growth for its ad business, with targets to grow from $50 million this year to $400 million in sales by 2027.
Lyft's long-term "targets weren't overwhelming beats, but we see upside ahead with greater efficiency, mobility tailwinds, and West Coast recovery driving near-term beats," wrote BofA analyst Michael McGovern.
Analysts at Loop Capital also upgraded Lyft to a buy rating on Friday. The firm said Lyft's management showed it has a "firm handle on the levers for executing a successful turnaround," according to a quote from financial news publication The Fly.
Jefferies analyst John Colantuoni reiterated a neutral rating, however. He said Lyft's presentation offered something for both bulls and bears of the stock. On the positive side, there was the company's outlook and commitment to investing in its strong areas.
"However, limited details on potential offsets to insurance inflation make it difficult to have confidence in seemingly aggressive 3-year targets," the Jefferies analyst wrote to clients.
Uber And Lyft Stock Hit By Tesla Robotaxi Concerns
Including Friday's slip, Lyft stock has gained 4% on the year compared to a 12% gain for the S&P 500. Shares advanced following Lyft's first quarter earnings report in May but have mostly traded sideways since then.
Concerns about plans from Tesla for a robotaxi service launch weighed on both Lyft stock and that of its larger rival Uber in recent weeks.
In a separate note focused on Uber stock Friday, BofA analysts said they expect Tesla's robotaxi plans to remain an overhang on Uber until Tesla hosts its robotaxi event in August.
"We would expect new information on AV (autonomous vehicle) enabled autos and/or robotaxi opportunity (or why have the day?), which will likely remain an overhang on Uber into August," the analysts wrote. "However, we think the industry is likely several years away from AVs being a viable nationwide service, and less competitive uncertainty post Tesla's robotaxi day could benefit Uber's stock, given overhang."
BofA Securities also rates Uber stock as a buy.
Meanwhile, Lyft stock has an IBD Composite Rating of 85 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
