On Thursday, KeyBanc Capital Markets maintained a Sector Weight rating on Lyft stock (NASDAQ:LYFT), focusing on the company’s recent expansion into the European market. The stock, currently trading at $11.02, has seen a 20% decline over the past six months, though InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model. KeyBanc analyst Justin Patterson highlighted the potential benefits of the move, noting that Lyft’s foray into Europe could be achieved at a relatively low cost while expanding the Total Addressable Market (TAM) — addressing a common critique from investors.
Patterson pointed out the opportunities for Lyft to enhance efficiency and attract more partners, particularly in the areas of fleet management and autonomous vehicle (AV) collaborations. The company has shown strong execution potential, with revenue growing 31% in the last twelve months to $5.8 billion. However, he also raised questions about the costs associated with scaling in competitive markets, considering that rivals Uber (NYSE:UBER) and Bolt significantly lead in monthly app downloads compared to the European mobility service FREENOW, which Lyft is set to compete against.
The analysis further delved into the uncertainties surrounding how international expansion was incorporated into Lyft’s Market Targets (MT) and how the activist investor, Engine No. 1, might react amid its ongoing proxy battle, which includes director nominations.
KeyBanc’s continued Sector Weight rating reflects a neutral stance on Lyft’s stock, suggesting that the firm sees the stock as fairly valued at the current price, with balanced risk and reward in the near term. The rating indicates that KeyBanc does not currently recommend increasing or decreasing holdings in Lyft shares based on the current market conditions and company prospects.
In other recent news, Lyft has announced its acquisition of the European online taxi and rideshare platform FREENOW in a deal valued at $197 million. This strategic move is expected to nearly double Lyft’s potential market size and significantly expand its presence in major European cities. The acquisition is anticipated to enhance Lyft’s annualized gross bookings by approximately seven percentage points, contributing to the company’s ambitious goal of reaching around $25 billion in bookings by 2027. Analysts from BTIG have maintained a Neutral rating for Lyft, while Oppenheimer has set an Outperform rating with a $15 price target, reflecting differing perspectives on the company’s growth potential. The purchase of FREENOW is seen as a strategic effort to diversify Lyft’s services and expand its customer base in Europe. BMO Capital Markets also reiterated a Market Perform rating, emphasizing the potential growth opportunities in the European market despite existing competitive pressures. Lyft’s ongoing innovation efforts, such as ’Wait & Save’ and ’Prime-Time’ features, are expected to bolster its Rideshare segment. The acquisition is set to be finalized in the second half of 2025, marking a significant development in Lyft’s expansion strategy.
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