Oppenheimer Boosts Lyft Target Price 25% on Positive Industry Outlook

Oppenheimer has raised its target price for Lyft Inc. (LYFT.US) to $20, indicating a potential 25% upside from the previous close. This adjustment follows a positive industry outlook and Lyft's stock performance since the release of its first-quarter earnings report. The firm maintains its "outperform" rating on the company, citing the cooling of the autonomous driving sector as a catalyst for new opportunities in the shared mobility space.

The decision to raise the target price is based on several factors. Firstly, the autonomous driving sector has faced significant challenges, leading to a shift in focus towards more immediate and practical solutions in the shared mobility market. This shift presents a unique opportunity for Lyft, which has been at the forefront of the ride-sharing industry. The company's strong market position and innovative approach to transportation services make it well-positioned to capitalize on this trend.

Analysts Chad Larkin and Jason Helfstein noted that the rising cost of car ownership, combined with the lackluster response to Tesla's autonomous driving taxi service in Austin, has created an opportunity for Lyft to narrow the gap with Uber. The market's pessimistic expectations about autonomous driving technology disrupting shared mobility demand have been dispelled. Tesla's limited number of autonomous driving taxis failed to cause a significant impact on the industry, confirming that traditional shared mobility services still have a solid market foundation.

Since Lyft released its first-quarter financial report in May, consumer demand and industry competition have not shown significant changes. This stability provides a positive outlook for the company's performance in the second quarter and the second half of the year. Analysts expect Lyft to gradually achieve a "meaningful EBITDA profit margin expansion," which will provide more resources for value-added acquisitions, such as the previous acquisition of FreeNow. Additionally, Lyft may initiate a stock buyback program to enhance shareholder value.

Based on the optimistic industry outlook and Lyft's stock price trend since the release of its first-quarter earnings report, Oppenheimer maintains its "outperform" rating on the company and raises its target price by $3 to $20, indicating a 25% potential upside from the previous close. It is worth noting that market evaluations of Lyft are divided. Seeking Alpha gives a "buy" rating, while Wall Street analysts generally hold a "hold" view. However, Seeking Alpha's quantitative rating system has consistently maintained a "buy" rating for Lyft since April, with a current quantitative score of 4.34 out of 5, reflecting institutional investors' recognition of its long-term value.