Lyft Slides as Analysts See More Opportunities at Uber

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(Bloomberg) -- Lyft Inc. erased early gains on Tuesday as multiple analysts who started coverage on the stock said they preferred larger rival Uber Technologies Inc.

Lyft drew a mix of buy, hold and sell ratings from at least nine new analysts as a quiet period expired for Uber. Lyft shares have fallen more than 19% since their initial public offering in late March, while Uber has slid 8% since its May debut. Both companies have faced questions about revenue growth, spending and their path to profitability, but Uber -- even with its higher valuation -- has so far come out ahead.

Shares of Lyft slid 2.3% at 10:42 a.m. in New York after earlier rising as much as 2.7%. Uber slipped 0.2%.

Here’s what Wall Street is saying about Lyft:

RBC, Mark Mahaney

“Investors largely agree that Lyft (like Uber) faces a very large TAM -- total addressable market.”

The analyst sees four key paths to profitability, including eventual rationalization in competitive dynamics leading to fewer subsidies, long-term pricing power based on a compelling value proposition, and insurance and expense leverage due to scale.

Initiated Lyft at outperform, price target $72.

BTIG, Walter Piecyk

Both Lyft and Uber “can deliver profitability on what is effectively a taxi/chauffeur-replacement service. This likely even justifies these companies’ current valuations.”

“However, we believe the reason investors should own these stocks over the long-term will be the role that both can play in an autonomous future.”

“We prefer Uber over Lyft primarily because of the scale of their operations, but also because of Uber’s willingness to leverage their platform across multiple use cases, all of which we expect to benefit from autonomy.”

Initiated Lyft with a buy, price target $77.

Loop Capital, Jeffrey Kauffman

“The narrative on competitive intensity is improving. LYFT’s primary competitor said last week they see easing price competition, echoing management’s own commentary from their first-quarter earnings call.”

“Our earnings power analysis points to a much more valuable company in the future, but our current model does not justify the risk premium we look for in emerging stories with unproven models.”

Initiated Lyft with a hold, price target of $60.

Wolfe, Rod Lache

“We believe that U.S. rideshare growth is moderating more rapidly than perceived and we also see risk from initial entries of autonomous vehicle based platforms. Both of these developments could perpetuate investor concerns about the risks.”

“On the other hand, our analysis suggests that Investors underestimate the opportunities from International Rideshare and Food Delivery, and we see a path to cash flow improvement for Uber.”

Initiated Lyft with underperform, price target $52.

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