Stifel is bullish on the ride-hailing industry and raised its target price on Lyft Inc LYFT 0.72%, while starting coverage of Uber Technologies Inc UBER 0.43%.
Stifel’s Scott Devitt raised the target price on Lyft from…
$70 to $76 and is keeping a Buy rating on the stock.
Devitt initiated coverage of Uber with a Hold rating and a $50 price target.
Stifel likes the company’s opportunity for growth and scale, and backs its ability to be the market leader in most regions. But Devitt comes up short of recommending a buy because of heavy competition, slower net revenue growth, and critically, “a significantly long road to profitability.”
With significant reacceleration in growth of users or trips, better-than-expected take rate trends, or changes in the competitive landscape, Devitt could revisit Uber, which went public in early May.
“The questions currently driving the Uber debates are the company’s ability to achieve long-term growth targets and the path to profitability,” Devitt wrote in a note.
Stifel expects Uber to reach break-even status in 2022 or 2023, growing from a $1.8 billion loss in 2018.
Since Lyft went public at the end of March, shares have dropped 14% from the IPO price of $72, so value is good for a company that is seeing strong ridership growth. Lyft’s brand awareness may have gotten a boost from the IPO, enabling it to pick up some market share, according to Devitt.
“We view Lyft as well positioned to extend rider growth momentum through the balance of 2019,” Devitt wrote.
The market is also getting…
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