Lyft Stock Rises as Keybanc Raises Its Rating on the Company’s Prospects

Lyft Stock

Lyft Stock (NASDAQ:LYFT)

During premarket trading on Tuesday, shares of Lyft (NASDAQ:LYFT) increased by more than 3% after the investment firm KeyBanc Capital Markets revealed that new data for the ridesharing company indicates that it may be more lucrative in 2023 than investors think.

According to the observations of analyst Justin Patterson, the company’s First Look data sample revealed an upward trend for Lyft stock in December. There is the possibility for an increase in EBITDA in 2023 when this factor is paired with the ongoing progress made on the West Coast and the company’s recent cost-cutting measures, which include layoffs implemented the previous year.

After factoring in strong cost-cutting measures in recent quarters and a continuing rebound along the West Coast, Patterson told clients that he expects Lyft’s EBITDA to rise significantly by 2023.

Patterson has increased his expected EBITDA objective for 2024 to $848 million, which is lower than the company’s stated $1 billion but higher than the average estimate of $828 million from Wall Street.

In addition, Patterson said that the increase in driver app downloads has leveled out and is heading in the same direction as Uber Technologies (UBER). Patterson also said that Lyft’s stock valuation is “attractive” at current levels, trading at 9 times the expected 2024 enterprise value-to-EBITDA while expanding in the “mid-teens” and with improving margins. This information was presented in the context of the company’s trading at 9 times the estimated enterprise value-to-EBITDA.

To provide a point of contrast, Uber (NYSE:UBER) is now trading at almost 13 times the same measure while also increasing in the high teens and seeing comparable levels of margin growth.

Patterson also looked at the Uber (NYSE:UBER) data and found that the trends continue to be “Stable.” According to the data provided by KeyBanc’s First Look, customer growth remained at roughly 5% year-over-year. In comparison, indexed transaction growth fell to 4% year-over-year. Patterson found this information after looking at Uber data.

During premarket trading on Tuesday, the price of a share of Uber (NYSE:UBER) declined by a penny to $30.40.

Most industry observers have a positive outlook on Lyft stock. 

Featured Image: Unsplash @ Austin Distel

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