Lyft stock is stuck in “Neutral” at Roth

A better than expected fourth quarter from Lyft (Lyft Stock Quote, Chart, News, Analysts, Financials NASDAQ:LYFT) wasn’t quite enough for Roth MKM analyst Rohit Kulkarni to recommend the stock.

On February 13, LYFT reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of $66.6-million on revenue of $1.2-billion, a topline that was up 4% over the same period last year.

“In 2023, the Lyft team set ambitious goals and the results speak for themselves. We reached the highest level of annual riders in our history, delivered over 700 million rides, and helped drivers take home over $8 billion,” said CEO David Risher. “This year we’ve already launched a new pay standard for drivers and expanded Women+ Connect to over 240 markets – and it’s only February 13th. In 2024, we’ll prove that Lyft’s customer obsession will drive profitable growth.”

Kulkarni says that while he sees some green shoots at Lyft he wants to see more. In a research update to clients February 20, the analyst maintained his “Neutral” rating while lifting his price target from $12.00 to $18.00.

“We are very encouraged with Lyft’s progress and believe the company is close to achieving sustainable and improving unit economics,” he wrote. “We have a positive bias towards Lyft shares, however, would like to see evidence that 4Q/1Q trends aren’t just a flash in the pan. Our PT goes to $18 based on 14.0x ’25E EBITDA, and believe there’s upside to both multiples and estimates, IF Lyft’s execution remains steady and predictable.”

Kulkarni thinks LYFT will post EPS of $0.42 on revenue of $5.15-billion in fiscal 2024. He expects those numbers will improve to EPS of $0.71 on a topline of $5.98-billion the following year.

“Lyft shares were extremely volatile last week reacting to an unfortunate error in the press release calling for 500bps of adj. EBITDA margin expansion in 2024 that was quickly corrected to 50bps by the company,” the analyst added. “Lyft’s EV/EBITDA multiple has gone from ~11.0x in November to currently at ~16.5x (1-year forward) vs. UBER and DASH (Neutral) both at 22.5x and CART (NC) at 6.5x. We see significant potential for Lyft’s multiple to expand and partially close the wide valuation gap with peers. Assuming ~20x EBITDA yields ~$22/share in price.”