Why this analyst just raised his price target on Lyft

Roth Capital Partners analyst Rohit Kulkarni says Lyft’s (Lyft Stock Quote, Chart, News, Analysts, Financials NASDAQ:LYFT) Q2 results showed accelerating growth, record demand and improving free cash flow.

In an Aug. 9 update, Kulkarni reiterated his “Buy” rating on Lyft and raised his target to US$25.00 from $23.00

Lyft reported record Q2 gross bookings and rides, with gross bookings up 23% year-over-year and rides up 12% to 262-million. Active riders rose 17% to a record 30.5-million.

Kulkarni noted Lyft generated US$319.6-million of free cash flow in Q2 and US$1.1-billion over the last 12 months, reinforcing the durability of its earnings profile.

The analyst said two changes are driving the story: Lyft’s marketplace is shifting toward partnership-linked and premium rides with better unit economics, and autonomous vehicle catalysts are becoming more tangible.

Partnership-linked rides reached about 30% of North American rideshare rides, an all-time high. Management said it is focused on deepening existing partnerships with companies including DoorDash, United Airlines and Chase.

Kulkarni also pointed to progress on autonomous vehicles, including the completed transition of the Nashville Waymo fleet to Lyft staff ahead of an October depot opening. Early-stage Baidu testing is also underway in London, though he said it is too small to affect earnings.

Q3 guidance calls for gross bookings growth of 15% to 19% and Adjusted EBITDA margin of 3.3% to 3.6%, up from 3.2% in Q2.

Kulkarni said he sees a path to the high-$20s for Lyft shares if autonomous vehicle rollouts and partnerships continue to scale.

Risks include a gap between gross bookings and ride growth, slower Q3 growth compared with Q2, ongoing acquisition integration costs and uncertainty around the timing and economics of autonomous vehicle deployment.

He expects Lyft to generate Adjusted EBITDA of US$702.1-million on revenue of US$7.34-billion in fiscal 2026, improving to Adjusted EBITDA of US$877.5-million on revenue of US$8.46-billion in fiscal 2027.

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