Why Lyft's Quarter-To-Quarter 'Bumpiness' Could Hurt Stock: 7 Analysts Break Down Q3 Earnings

Ride share company Lyft Inc (NASDAQ: LYFT) reported third-quarter financial results after hours Monday. Here is a look at where analysts stand after the earnings report.

The Lyft Analysts: Morgan Stanley analyst Brian Nowak has an Equal Weight rating on Lyft and lowered the price target from $24 to $23.

RBC Capital analyst Brad Erickson has a Sector Perform rating and $16 price target.

Wedbush analyst Daniel Ives has an Outperform rating and lowered the price target from $25 to $17.

KeyBanc analyst Justin Patterson has a Sector Weight rating. 

Raymond James analyst Aaron Kessler has a Market Perform rating. 

D.A. Davidson analyst Tom White has a Buy rating and lowered the price target from $25 to $19.

Needham analyst Bernie McTernan has a Hold rating. 

Related Link: Lyft Stock Is Crashing Today, What's Going On? 

The Lyft Takeaways: Nowak said the key items from the third-quarter financial results were active rider growth, insurance costs and headcount cost savings.

“In our view, LYFT’s ability to articulate and execute on its drivers of multi-year top-line growth and path toward scaling profitability are likely to be important to the stock,” Nowak said.

The analyst prefers Uber Technologies (NYSE: UBER) in the ride share sector.

Erickson said Lyft lost market share in the third quarter and is now increasing its incentives for drivers, which could cause a “structural competitive disadvantage.”

“It seems there’s reversion potential on several fronts, however, the ongoing fundamental qtr-to-qtr bumpiness will likely continue to impede stock appreciation,” Erickson said.

Ives said the third-quarter report from Lyft showed some momentum but came in short of its rival.

“Coming off the heels of Uber’s strong print last week, these results are a modest disappointment in the eyes of the Street with the total revenue and total active riders missing expectations as the company continues to navigate this difficult macro environment,” Ives said.

The analyst said Lyft could be helped by an improvement to driver shortages.

Patterson said Lyft's rider and volume figures are a “cautionary flag” for the sector.

“While neither Lyft nor its peer has seen macro headwinds yet, we remain cautious that revenue growth aided by higher prices and NT demand for services are masking macro impacts,” Patterson said.

The analyst said both Lyft and Uber missed on customer growth compared to estimates.

Kessler said Lyft’s third quarter results were “mixed.”

“Additionally, Lyft expects higher insurance costs to weigh on 4Q contribution margin,” Kessler said.

The analyst keeps a Maker Perform rating and believes shares are fairly valued at a multiple of 7x 2023 EV/EBITDA.

White kept a Buy rating on Lyft and said the results were mixed in the third quarter.

“The bottom line is that, although we have some concerns about the pace and breadth of Lyft’s broader post-pandemic revenue recovery, the company has done a solid job monetizing its active rider base over the past few quarters,” White said.

McTernan said EBITDA in the third quarter and estimates for the fourth quarter were better than expected. The analyst said the guidance from the company could be high.

“While the stock is cheap, even assuming Lyft does not hit their ‘24E targets we are looking for signs of continued execution before becoming more bullish on shares,” McTernan said.

LYFT Price Action: Lyft shares are down 20% to $11.25 on Tuesday.

Read Next: How To Trade Lyft Into Q3 Earnings, Has Stock Bottomed Or More Pain Ahead? 

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